Value relevance of accounting information is a very important issue – not just from the perspective of Foreign Direct Investment and the reliability and relevance of financial and accounting information for investors – whether institutional of individual, but also in matters of Corporate Social Responsibility and financial reporting. This being of crucial importance given the need to enhance the quality and presentation of financial information, the need for comparability and consistency as a means of enhancing the relevance and reliability of financial information. This issue of reconciliation of discrepancies hence constitutes a matter in need of urgent redress in capital markets.
This chapter aims to investigate the results of the value relevance of accounting information with reference to the study: “The value relevance of accounting information in the Italian and UK stock markets”. Results revealed from this study are as follows: - First, evidence shows the greater value relevance of accounting information in Italy than in the UK, even if this result must be explained according to the sample's characteristics. Second, the study underlines that in Italy the most value relevant accounting data refer to earnings while in the UK the focus is mainly on cash flows. The chapter also seeks to contribute to the gap in the literature on the value relevance of accounting information in the UK and Italy. In so doing it investigates the relevance and reliability of results derived in this study, their applicability to current market developments – as well as recent fluctuations and volatility in the financial markets.
This chapter not only attempts to identify those variables which govern and impact the relationship and interplay between Corporate Social Responsibility and Foreign Direct Investment, but illustrate the conditions under which such variables are likely to be most susceptible to change and fluctuations – as well as consequences that are likely to be generated as a result of such fluctuations. In so doing it also contributes to the literature in highlighting why greater focus and priority should be accorded to Foreign Direct Investment and Corporate Social Responsibility, as tools for poverty alleviation. Further, as well as accentuating, under the conclusion section, why the UK Government strategy for building more plants after Hinkley Point, implies that the UK would not reap all benefits of the Project, the chapter expansiates on contributory factors which have resulted in the decision of the UK Government to delay its decision on the Hinkley Point Project. Contributory factors, which include among a notable few, the need for flexible generating capacity was also cited, since renewable energy cannot be easily converted at Hinkley Point.
In accounting for the gaps in the literature between the period 2011 and 2016, more recent literature – particularly empirical related studies on the topic have been consulted to consolidate on the paper “Foreign Direct Investment in China: Its Sectoral and Aggregate Impact on Economic Growth”. As highlighted by Wei (2013), it is important to recognize and acknowledge that the relationship between FDI and employment is affected by many variables, such as growth of the national population, increased exports, and growth of the domestic economy. Furthermore, as illustrated by Iamsiraroj and Doucouliagos (2015), whilst positive and negative effects may be demonstrated in relation to economic growth, in some countries, no effects can be deduced as regards the relationship between economic growth and FDI in certain other countries. This chapter also aims to accentuate the need for greater focus on environmental issues - as well as poverty alleviation - than is currently the case within the sphere and framework of Carroll's pyramid of Corporate Social Responsibility.
By way of reference to a comparative analysis between three selected jurisdictions from the Middle East, Africa and Asia, this chapter aims to investigate the trends in value relevance of accounting information in these stock markets and exchanges. Further, amongst other goals and objectives, this chapter also seeks to illustrate why in light of recent developments which have resulted in decline of reliability - as a valued attribute, relevance and reliability still constitute fundamental characteristics which are required in the development of global stock markets and economies. It consolidates this aim in view of recent IASB and FASB's initiatives and the resulting framework which categorizes understandability, comparability, timeliness and verifiability as enhancing qualitative characteristics of accounting information.
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