Bridging theory and practice: International valuation standards and asset valuation in the telecommunications sector
-
Author(s)Mohammed Hayder Mohammed ShanshoolLink to ORCID Index: https://orcid.org/0009-0003-7124-8871
,
Bushra Najem Aubdullah Al-MashhadaniLink to ORCID Index: https://orcid.org/0000-0002-6574-3783
-
DOIhttp://dx.doi.org/10.21511/imfi.21(2).2024.24
-
Article InfoVolume 21 2024, Issue #2, pp. 300-309
- 257 Views
-
124 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
In the rapidly evolving telecommunications industry, accurate valuation of tangible assets remains a critical challenge that requires adherence to universally recognized standards. This study addresses the pressing need for transparent and precise asset valuation methodologies that are pivotal for informed investment decisions and financial reporting. It aims to bridge the theoretical and practical divide in asset valuation by applying International Valuation Standards (IVS) 300 and 400 to Asiacell Communications PJSC, a leading entity in the sector. Focusing on five key tangible assets from 2018 to 2022 – lands, buildings, plant and equipment, means of transport and transfer, and furniture and office equipment – the study employs the income approach, augmented by a random walk model for future cash flow forecasting and the weighted average cost of capital for discounting. This innovative methodology offers a comprehensive valuation framework, revealing that despite Asiacell’s consistent growth rate of 4.63%, all asset categories experienced a depreciation upon revaluation. The study’s findings underscore the significance of implementing IVS in elucidating the asset valuation process, demonstrating the potential discrepancies between book values and standards-based valuations. The application of IVS 300 and IVS 400 not only enhances the transparency and accuracy of asset valuation but also provides valuable insights into the contributions of tangible assets to future income within the prevailing market conditions. By offering a replicable model for asset valuation in dynamic industries, this study contributes to the broader discourse on financial reporting and investment analysis, setting a foundation for future exploration in the field.
- Keywords
-
JEL Classification (Paper profile tab)M41, M49
-
References47
-
Tables5
-
Figures0
-
- Table 1. Tangible assets in book value of Asiacell Communications PJSC (million dinars)
- Table 2. Relative weight of tangible assets
- Table 3. Total cash flows of Asiacell Communications PJSC (million dinars)
- Table 4. Contribution of tangible assets to cash flow of Asicacell Communications PJSC (million dinars)
- Table 5. Tangible assets of Asiacell Communications PJSC measured according to the IVS 300 and IVS 400 using the income approach (million dinars)
-
- Abdullah, A. Y., & Abdullah, S. H. (2020). Accounting measurement of intangible assets (websites) within the framework of international financial reporting standards (applied research among a sample of Iraqi commercial banks). Journal of Economics and Administrative Sciences, 26(122), 517-542.
- Aini, A. N., Napitupulu, H., & Sukono, S. (2023). The Influence of Operating Cash Flow, Net Income, Depreciation Expenses, and Amortization Expenses on Cash Flow Forecasting at PT. Bank XYZ. International Journal of Quantitative Research and Modeling, 4(3), 126-135.
- Albu, S. (2018). The consequences of the omission of the property rights study in the real estate assessment process. Journal of Engineering Sciences, 4, 57-66.
- Alemu, K. (2022). Assessment of international financial reporting standard implementation effectiveness: The case of Ethio-Telecom (Doctoral dissertation). St. Mary’s University.
- AL-Khafaji, A. A. K., Mustafa, R. F., & Hasan, I. S. (2022). The impact of the application of International Standard No. 13 on the market value of banking sector companies in the Iraqi Stock Exchange. Periodicals of Engineering and Natural Sciences, 10(3), 151-160.
- Almeant, S. S. A. (2020). International Business Valuation Standards: Accounting Perspective. In Sinem Derindere Kseoglu (Ed.), Valuation Challenges and Solutions in Contemporary Businesses (pp. 24-40). IGI Global.
- Al-Sadi, A. S. M. S., & Al-Mamouri, A. M. T. (2022). The impact of asset management on achieving bank profitability (Applied study within Al-Khaleej commercial bank). Periodicals of Engineering and Natural Sciences, 10(5), 5-13.
- Al-Shadidi, H. K. S., & Mohammad, M. A. (2016). Accounting Disclosure for non-current intangible assets according to international accounting standard (IAS16, 36): A Comparative Study of the State Company for Travelers and delegates Transportations. Journal of Accounting and Financial Studies, (Special Issue).
- Al-Taie, B. F. K., & Al-Mathno, M. Y. H. (2013). Assets Valuation Approaches & its Reflects on Financial Reporting Quality. Journal of Economics and Administrative Sciences, 19(74), 408-427.
- Alyami, Z. (2017). Asset valuation: a performance measure for comprehensive infrastructure asset management.
- Asiacell Communications PJSC. (Year). Financial report.
- Baule, R. (2019). The cost of debt capital revisited. Business Research, 12(2), 721-753.
- Baum, A., Baum, C. M., Nunnington, N., & Mackmin, D. (2013). The income approach to property valuation. Estates Gazette
- Bellman, L., & Lind, H. (2019). Valuation standards and methods: are Sweden’s (still) different? Journal of European Real Estate Research, 12(1), 79-96.
- Bhattacharya, S., Gupta, A., Kar, K., & Owusu, A. (2020). Risk management of renewable power producers from co-dependencies in cash flows. European Journal of Operational Research, 283(3), 1081-1093.
- Blackledge, M. (2016). Introducing property valuation. Routledge.
- Cerqueira, A., & Pereira, C. (2014). Financial reporting quality and information asymmetry in Europe. British Accounting Review, 46, 32-51.
- Crosby, N., Hutchison, N., Lusht, K., & Yu, S. M. (2018). Valuations and their importance for real estate investments. Routledge.
- Dakheel, A. F., & Ibrahim, M. A. (2022). The Impact of the Application of International Financial Reporting Standards (IFRSs) on the Level of Accounting Conservatism and Its Implication on the Operational Performance Indicators of Iraqi Private Banks. Resmilitaris, 12(2), 4151-4167.
- Dugeri, T. T., Gambo, Y. L., & Ajayi, C. A. (2012). Internalising international valuation standards: Relevance and applicability issues in the Nigerian context. ATBU Journal of Environmental Technology, 5(1), 100-116.
- Fargher, I. (2018). The ‘value to the owner’ objective and its implications in the separate recognition of personal and enterprise goodwill. Australasian Accounting, Business and Finance Journal, 12(3), 87-106.
- Fazzini, M. (2018). Business valuation: Theory and practice. Springer.
- Gabriel, K. B. (2008). An evaluation of factors influencing inaccuracy in residential property valuation in Lagos Metropolis (Doctoral dissertation). University of Lagos, Nigeria.
- Gambo, Y. L. (2014). Response of Nigerian Valuers to International Valuation Standards Application: How Far the Journey. The Estate Surveyor and Valuer, 39(2), 89.
- Gambo, Y. L. (2015). Use and Enforcement of Valuation Standards in Nigeria (Doctoral dissertation). University of Lagos.
- Hafez, R. M., & Madney, I. (2020). Suez Canal Region as an economic hub in Egypt location analysis for the mass real estate appraisal process. HBRC Journal, 16(1), 59-75.
- Hemphill, L., Lim, J. L. C., Adair, A., & McGreal, S. (2014). The role of international and local valuation standards in influencing valuation practice in emerging and established markets.
- IVSC. (2021). International Valuation Standards (IVS) – Effective 31 January 2022.
- Jassim, K. H., & Al-Janabi, A. M. S. (2021). The role of international valuation standards (IVS) in enhancing the quality of financial reporting (appropriate accounting information). Journal of Accounting and Financial Studies, 16(57).
- Mazzarol, T., Reboud, S., & Mazzarol, T. (2020). Cash flow, profit and working capital. Small Business Management: Theory and Practice (pp. 409-450).
- Mert, I. (2020). The Importance of Fixed Asset Revaluations in Economic Crises Periods. Journal of Business and Social Science Review, 1(7), 35-45.
- Mohammed, B. H., Rasheed, H. S., Wahhab, R., & Maseer, A. J. A. W. (2020). The Impact of Mandatory IFRS Adoption on Accounting Quality: Iraqi Private Banks. International Journal of Innovation, Creativity and Change, 13(5), 87-103.
- Morais, A. I., Fialho, A., & Dionísio, A. (2018). Is the accounting quality after the mandatory adoption of IFRS a random walk? Evidence from Europe. Journal of Applied Accounting Research, 19(3), 334-350.
- Moro-Visconti, R. (2022). The valuation of intangible assets: an introduction. In The Valuation of Digital Intangibles: Technology, Marketing, and the Metaverse. Cham: Springer International Publishing.
- Muhabbat, H., & Jakhongir, S. (2024). Harmonization of International Valuation Standards and International Financial Reporting Standards. ASEAN Journal of Economic and Economic Education, 3(2), 143-164.
- Nwakpuda, N. J. (2021). Analysis of Adherence to Valuation Standards and Property Value Certification by Estate Surveying and Valuation Firms in Lagos, Nigeria.
- Ogunba, O. A., & Ajayi, C. A. (2007). The response of Nigerian valuers to increasing sophistication in investors’ requirements. Journal of Property Investment & Finance, 25(1), 43-61.
- Parker, D. (2023). Introduction to Property Valuation in Australia. Taylor & Francis.
- Parker, D. (Ed.). (2022). Principles and Practice of Property Valuation in Australia. Routledge.
- Rady, A., Meshreki, H., Ismail, A., & Núñez, L. (2019). Variations in valuation methodologies and the cost of capital: Evidence from MENA countries. Emerging Markets Finance and Trade, 55(9), 2106-2123.
- Shapiro, E., Mackmin, D., & Sams, G. (2019). Modern methods of valuation. Estates Gazette.
- Taqeem. (2022). The Regulatory Framework of Real Estate Valuation in Saudi Arabia and International Valuation Standards.
- Vartiainen, E., Masson, G., Breyer, C., Moser, D., & Román Medina, E. (2020). Impact of weighted average cost of capital, capital expenditure, and other parameters on future utility-scale PV levelised cost of electricity. Progress in Photovoltaics: Research and Applications, 28(6), 439-453.
- Vaz, A. J. F., & Anjos, M. (2021). International valuation standards-comparative analysis.
- Wyatt, P. (2022). Property valuation. John Wiley & Sons.
- Yirga, T. (2020). Assessment of the Practice of Real Property Valuation for Expropriation Compensation: The Case of Bahir Dar City, Amihara, Ethiopia (Doctoral dissertation).
- Yun, J. (2020). A re-examination of the predictability of stock returns and cash flows via the decomposition of VIX. Economics Letters, 186, 108-755.
-
Industrial development in Saudi Arabia: disparity in growth and development
Anis Ali
doi: http://dx.doi.org/10.21511/ppm.18(2).2020.03
Problems and Perspectives in Management Volume 18, 2020 Issue #2 pp. 23-35 Views: 3087 Downloads: 1043 TO CITE АНОТАЦІЯIndustrial development in any nation plays a vital role in the strengthening of the economy and employs human resources as per specifications and directly towards the mainstream of the nation. In Saudi Arabia, there was rapid industrialization for four decades. Some manufacturing industries performed well, while some internal and external business environment factors influenced the others’ performance. The study focuses on historical development, as well as recent trends of well-performing and poor-performing industries of Saudi Arabia. Small manufacturing industries in Saudi Arabia are underdeveloped and need more attention to attain sustainable and progressive growth rate in the form of the number of establishments to enjoy the potential. Manufacture of tobacco, computer, electronics and optics, pharmaceuticals and transport equipment are the deprived and underdeveloped industries of the manufacturing sector. There should be some easy credit schemes for the development of deprived or underdeveloped manufacturing industries. To attain sustainable growth and development of the manufacturing sector, a positive attitude of the government towards underdeveloped manufacturing industries, favorable labor laws, and entrepreneurial awareness, technical and financial assistance are necessary. The growth and development of the manufacturing sector of Saudi Arabia will be helpful in the attainment of goals of Vision 2030.
-
Why banks should consider ESG risk factors in bank lending?
Sarwar Uddin Ahmed ,
Samiul Parvez Ahmed ,
Ikramul Hasan
doi: http://dx.doi.org/10.21511/bbs.13(3).2018.07
Banks and Bank Systems Volume 13, 2018 Issue #3 pp. 71-80 Views: 2863 Downloads: 1146 TO CITE АНОТАЦІЯWhy banks should be concerned about incorporating environmental, social and governance (ESG) criteria in the lending process? What is the motivation? This study aims to find the motives for considering environmental, social and governance (ESG) criteria in bank lending process. A primary survey has been conducted to know the current status and motivation for incorporating ESG factors in investment decisions. Sample comprised 30 private commercial banks (PCBs) operating in Bangladesh. Data collected were analyzed with graphs, descriptive statistics, and regression analysis. Findings of the study indicate that banks are mostly considering basic environmental, social and governance factors set by regulators qualitatively. They are lagging behind in considering the advanced ESG criteria needed for sustainable and efficient credit risk management. Based on motivation for incorporating ESG factors, it was found that banks pioneering in incorporating ESG factors in lending decisions are compensated through better financial performance. Findings of the study are expected to encourage practitioners and policy-makers to take more pragmatic steps to incorporate ESG risk factors quantitatively in lending decision-making process.
-
Integrated reporting and financial performance of South African listed banks
Reon Matemane ,
Rozane Wentzel
doi: http://dx.doi.org/10.21511/bbs.14(2).2019.11
Banks and Bank Systems Volume 14, 2019 Issue #2 pp. 128-139 Views: 2800 Downloads: 553 TO CITE АНОТАЦІЯThe recent development of integrated reporting intends to address the limitations associated with corporate reporting practices. This paper aims to examine whether a statistically significant relationship exists between integrated reporting quality and financial performance. Secondary data was used, namely the integrated reports and annual financial statements of South African banks listed on the Johannesburg Stock Exchange (JSE) for 2010–2014. For the period 2005–2009, only the financial statements were used, since integrated reporting was not yet mandatory. The research design was longitudinal and it combined qualitative and quantitative methods. Descriptive statistics and Feasible Generalized Least Square (FGLS) were used to explore the relationships between financial performance and integrated reporting quality. The results indicate that there is a positive relationship between integrated reporting quality (IRQ) and earnings per share (EPS). However, there is no significant relationship between IRQ and Tobin’s q (Q-Ratio), IRQ and return on equity (ROE), IRQ and return on assets (ROA) as well as IRQ and economic value added (EVA). Moreover, there are no significant differences on the financial performance of the listed banks before and after the introduction of integrated reporting.
