Browsing by Author "Houqe, Noor"

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Open Access
Effects of audit quality on earnings quality and cost of equity capital: evidence from India
(Te Herenga Waka—Victoria University of Wellington, 2015) Houqe, Noor; Ahmed, Kamran; van Zijl, Tony
In this paper, using a large sample covering the 10 years from 1998 to 2009, we examine the role of audit quality in earnings quality (discretionary accruals and income smoothing) and cost of equity capital of Indian firms. We find evidence that firms employing high quality auditors experience higher earnings quality and lower cost of equity capital. We find that firms belonging to business groups have higher earnings quality and lower cost of equity capital than their non-business group counterparts. The results do not change after utilising alternative proxies for audit quality, earnings quality and cost of equity. Our findings contribute significantly to the literature on the role of audit quality as an effective monitoring mechanism as reflected in firm level earnings quality and cost of equity capital of listed firms in India which has distinct institutional features in relation to ownership structures and operations.
Open Access
Meta-analysis of the Impact of Adoption of Ifrs on Financial Reporting Comparability, Market Liquidity and Cost of Capital
(Te Herenga Waka—Victoria University of Wellington, 2021) Opare, Solomon; Houqe, Noor; Van Zijl, Tony
A large number of empirical studies have addressed the effects of adoption of IFRS, but the results have been mixed. We use a meta-analysis of 56 empirical studies with 1,265 effect sizes to determine the impact of adoption of IFRS on financial reporting comparability, market liquidity, cost of equity, and cost of debt. This approach provides an objective view of the empirical results, in contrast to narrative reviews which offer subjective conclusions. We find that IFRS adoption has increased financial reporting comparability, market liquidity, and reduced the cost of equity. For cost of debt, a decrease is observed only for voluntary adoption. Our meta-regression analysis explains the variation in the observed effect of adoption of IFRS across mandatory and voluntary adoption of IFRS, and choice of measures, control variables, estimation methods, and the strength of the empirical results. We emphasise the importance of these study characteristics and call for further studies focussing on the cost of debt and also studies using recent data to reflect the changes in IFRS. This study should be of interest to regulators and policymakers as they are expected to assess the impacts of adoption of IFRS.
Open Access
Secrecy and Mandatory IFRS Adoption on Earnings Quality
(Te Herenga Waka—Victoria University of Wellington, 2015) Houqe, Noor; Monem, Reza M.; Tareq, Mohammad; van Zijl, Tony
This study examines the effect of mandatory IFRS adoption on earnings quality in countries which exhibit high financial secrecy. Earnings quality is proxied by signed abnormal accruals and earnings conservatism. Using 19,324 firm-years from 14 countries over the period 1998-2011, we find that firms in a high-secrecy country tend to report higher abnormal accruals and earnings conservatism, which results in lower earnings quality. On the other hand, we find that mandatory IFRS adoption improves earnings quality by decreasing abnormal accruals and earnings conservatism. Our study provides evidence of the interaction between national culture, as indicated by secrecy, and IFRS adoption and helps to explain differences in earnings quality across different jurisdictions following IFRS adoption.
Open Access
Value Relevance of Environmental, Social, and Governance Disclosure
(Te Herenga Waka—Victoria University of Wellington, 2015) Zuraida, Zuraida; Houqe, Noor; van Zijl, Tony
This paper investigates the impact of Environmental, Social, and Governance (ESG) disclosure by companies around the world on market value. Using a large sample of non financial companies listed in 38 countries during the period 2008–2012, we test for value relevance by employing the modified version of the Ohlson (1995) model developed by Collins, Maydew, and Weiss (1997). We find support for the value relevance of disclosure of ESG both in aggregate form and for its individual components. These findings support the expectation of disclosure theory that disclosure of relevant information (such as ESG) has a positive impact on value. The results are robust to several alternative specifications. Consistent with the finance literature on the impact of legal origin (La Porta, Lopez de Silanes, & Shleifer, 2006; La Porta, Lopez de Silanes, Shleifer, & Vishny, 1998, 2000, 2002), the results for ESG disclosure are stronger in common-law countries. Our results provide new evidence for researchers, investors, and policy makers of the value relevance of ESG disclosure in a broad international setting. The evidence shows that globally investors benefit from the disclosure of both aggregate ESG and the individual factors and this supports regulators in pushing companies to provide additional ESG information.