The use and perceived usefulness of IAS 29 restated financial statements by Zimbabwean investment analysts

Chamisa, Eddie

doi:10.1080/10291954.2007.11435126

Cited by 3 publications

(5 citation statements)

References 2 publications

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“…First, the ZSE rewrote its listing rules in 1998 and required firms to publish data on board and ownership structures, hence, we can obtain the required data from the annual reports. Second, in November 1999, the Institute of Chartered Accountants in Zimbabwe and the ZSE formally determined that Zimbabwe was a hyperinflationary economy and required all listed firms to publish inflation‐adjusted financial statements in accordance with International Accounting Standard 29 (IAS 29): ‘Financial Reporting in Hyperinflationary Economies’ (see Chamisa, ) . The requirement to publish IAS 29 adjusted financial statements was effective for financial years beginning on or after 1 January 2000.…”

Section: Methodsmentioning

confidence: 99%

Corporate Boards, Ownership Structure and Firm Performance in an Environment of Severe Political and Economic Crisis

Mangena

Tauringana

Chamisa

2011

British J of Management

107

114

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This study examines the relationship between board and ownership structures and firm performance in an environment of severe political and economic crisis. Using panel data from the Zimbabwe Stock Exchange (ZSE) for the period 2000-2005, we split the period into prepresidential election period (2000)(2001)(2002) (a relatively stable political and economic period) and post-presidential election period (2003)(2004)(2005)) (a hostile political and economic period) to capture the differences in the political and economic landscape. We find that board size, ownership concentration and executive directors' share ownership increased whilst the proportion of nonexecutive directors reduced in the post-presidential election period. Employing a system Generalized Method of Moments (GMM) approach, we find that performance is positively related to board size and ownership concentration in the post-(but not in the pre-) presidential election period. The results also show that performance is negatively related to executive directors' share ownership in the post-presidential election period, but positively related in the pre-presidential election period. The proportion of non-executive directors is negative and significant in both periods. These findings support the notion that the effects of board and ownership structures depend on the nature of the firm's environment, and therefore have important implications for policy-makers.

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Section: Methodsmentioning

confidence: 99%

Corporate Boards, Ownership Structure and Firm Performance in an Environment of Severe Political and Economic Crisis

Mangena

Tauringana

Chamisa

2011

British J of Management

107

114

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“…Finally, our findings contribute considerably to debates relating to appropriate inflation accounting policies in inflationary environments. This is particularly relevant because many countries, especially in the developing world, experience very high inflation (see Gordon 2001;Chamisa 2007; American Institute of Certified Public Accountants 2010). In particular, policy makers such as the IASB may want to consider requiring or encouraging firms operating in hyperinflationary economies to publish both HC and IA financial statements.…”

Section: Discussionmentioning

confidence: 99%

“…This complexity view appears to resonate with one of the key arguments made by preparers and users of financial statements lobbying against the adoption of IAS 29 in Zimbabwe-that is, "users were more comfortable with HC financial statements" (Chamisa et al 2012: 7). Further, Chamisa (2007) finds that Zimbabwean analysts made little use of IA amounts in making investment decisions.…”

Section: The Valuation Effects Of Hc and Ia Accounting Amountsmentioning

confidence: 99%

“…First, if investors make little use of IA amounts, HC amounts will be more value relevant than IA amounts. Second, if investors primarily use HC amounts, as reported by Chamisa (2007), the information in the recognized inflation gains and losses will have incremental value relevance beyond that of HC amounts.…”

Section: The Valuation Effects Of Hc and Ia Accounting Amountsmentioning

confidence: 99%

“…In the end, firms voluntarily settled to present prominently both IA and HC amounts on the face of primary financial statements, side-by-side, ensuring that both sets of statements were audited and accompanied by detailed disclosure notes (see Appendix 1 for an example of the presentation format). To the firms, this provided the corner solution as it enabled them to be IAS 29 compliant and meet user demands for audited and detailed HC financial statements (see Chamisa 2007). This unique reporting practice offers opportunities to provide better insights on the relative and incremental value relevance of HC and IA amounts.…”

Section: Introductionmentioning

confidence: 99%

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Financial reporting in hyperinflationary economies and the value relevance of accounting amounts: hard evidence from Zimbabwe

et al. 2018

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We examine the relative and incremental value relevance of inflation-adjusted (IA) and historical cost (HC) amounts in a hyperinflationary economy. Using an innovative setting and a unique dataset drawn from annual reports of firms listed on the Zimbabwe Stock Exchange for the 2000-2005 period, we find that both sets of amounts are value relevant, but HC amounts are superior to IA amounts. We also show that inflation gains and losses provide incremental information content beyond that provided by the HC amounts and that the power of this incremental content model is equivalent to that of the HC model but superior to that of the IA model. Furthermore, we find that during the period of relatively low inflation, HC amounts are more value relevant than IA amounts, but the differences are less discernible during the period of relatively high inflation. Our analyses further show that the value relevance of both IA and HC amounts increases with the inflation rate, but the increase is greater for IA amounts. Finally, we show that HC amounts have a greater ability to predict future cash flows than IA amounts, which suggests that the superiority of the value relevance of HC amounts relative to that of IA amounts stems from their ability to predict future cash flows. Overall, our results suggest that in periods of relatively low inflation, HC amounts are more value relevant, while in periods of relatively high inflation, the two sets of amounts are equally value relevant and provide incremental information beyond that provided by the other.

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Introduction

Tauringana¹,

Mangena²

2012

Accounting in Africa

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The use and perceived usefulness of IAS 29 restated financial statements by Zimbabwean investment analysts

Cited by 3 publications

References 2 publications

Corporate Boards, Ownership Structure and Firm Performance in an Environment of Severe Political and Economic Crisis

Corporate Boards, Ownership Structure and Firm Performance in an Environment of Severe Political and Economic Crisis

Financial reporting in hyperinflationary economies and the value relevance of accounting amounts: hard evidence from Zimbabwe

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