The impact of IFRS on financial statement data in Greece

2016 ◽  
Vol 6 (1) ◽  
pp. 69-90 ◽  
Author(s):  
Ervin L Black ◽  
Anastasia Maggina
Keyword(s):  
Financial Crisis ◽  
Stock Prices ◽  
Academic Research ◽  
Financial Statements ◽  
Financial Statement ◽  
Financial Ratios ◽  
Macroeconomic Factors ◽  
Content Type ◽  
Ifrs Adoption ◽  
The Impact

Purpose – The purpose of this paper is to examine the effects of IFRS adoption on financial statement data and their usefulness in Greece. Additionally, the authors examine the effect on the informativeness/usefulness of financial statement data for stock prices in Greece and the effect of the Greek Financial Crisis. Design/methodology/approach – This study examine the effects of IFRS adoption on financial statement data and their usefulness in Greece. Additionally, the authors examine the effect on the informativeness/usefulness of financial statement data for stock prices in Greece and the effect of the Greek Financial Crisis. Findings – The results indicate that several financial ratios were dramatically affected by IFRS adoption in Greece. In contrast to other countries, IFRS has not resulted in improved statistical behavior of these ratios in Greece: the ratios are highly skewed and the normality of their distribution is not improved. Additionally, when examining the usefulness of financial statement data for stock prices in Greece, results indicate that IFRS adoption did not necessarily improve the usefulness of the financial statements. However, the authors do find that since the financial crisis in Greece these IFRS financial statement measures are significant when regressed on stock prices. Research limitations/implications – The authors are not able to necessarily rule out other causal factors that may have occurred in Greece during the sample period. The authors do look at the financial crisis as a potential confounding factor, but other factors such as political or macroeconomic factors have not necessarily been ruled out. Also, this study only examines the Greek situation. Practical implications – This study may have implications for other countries in similar situations as that found in Greece – IFRS adoption and severe economic crisis. Originality/value – To date only the impact of IFRS on earnings, stockholders’ equity, and some financial ratios has been investigated in prior Greek research studies (Hellenic Capital Market Commission, 2006; Grant Thornton, 2006). However, no academic research has been developed in this area. In addition, the authors examine the impact of IFRS on stock prices emphasizing the mandatory financial disclosure and IFRS adoption in a financially and politically distressed country – Greece.

The adoption of IFRS, comparability of financial statements and foreign investors’ ownership

2018 ◽  
Vol 26 (3) ◽  
pp. 391-411 ◽  
Author(s):  
Aria Farah Mita ◽  
Sidharta Utama ◽  
Fitriany Fitriany ◽  
Etty R. Wulandari
Keyword(s):  
Financial Statements ◽  
Business Environment ◽  
Financial Statement ◽  
Foreign Investors ◽  
Content Type ◽  
Depth Measurement ◽  
Ifrs Adoption ◽  
Adoption Level ◽  
Observation Period ◽  
The Eu

Purpose The purpose of this paper is to examine the indirect effect of the International Financial Reporting Standard (IFRS) adoption in increasing the foreign investors’ ownership through the improvement of comparability of financial statements. Design/methodology/approach This study employs listed companies in 18 countries across Europe, Asia, Africa, and Australia with an observation period from 2003 to 2012. Unlike previous studies, this study uses a continuous variable to measure the level of IFRS adoption which is measured at the country level. This study includes countries that do not fully adopt the IFRS, partially adopt, make some delays in adoption or some modifications to IFRS. Findings The results show that the level of IFRS adoption has a positive effect on the comparability of financial statements. The level of IFRS adoption indirectly increases the foreign investors’ ownership through the comparability of financial statements. These results are consistent with proponents for IFRS adoption which argue that the adoption improves the comparability of financial statements that in turn attracts greater cross-border investment. Research limitations/implications The findings of this study need to be interpreted with caution due to limitations. Although this research provides a detail measurement on the IFRS adoption, this study only looks at three general items of difference in adopting the IFRS. “Differences in text” used in this research has not quantified detail differences for each adopted standards. Therefore, future research can use a more in-depth measurement of the IFRS adoption level that considers differences or exceptions of accounting treatment. Practical implications The results suggest that the standards setting bodies’ (IASB) strategy on promoting the IFRS and objectives to develop a standard that leads to increase the financial statement comparability have been achieved. This research shows that the IFRS adoption plays a role in ensuring the financial statement quality in terms of its comparability. It implies that the standard-setting bodies in every country, as one of the responsible institutions regulating the business environment, can be entrusted with a greater role in order to ensure better financial information quality. Originality/value This study introduces novel measurement that is more detailed in measuring the IFRS adoption level instead of applying the discrete variable approach (“adopt” and “not adopt”) performed by previous studies (DeFond et al., 2011; Tan et al., 2011; Lee and Fargher, 2010). This study does not only cover some EU countries but also covers some countries in Asia, Africa, and Australia, so it can be better at capturing the variation of the IFRS adoption outside the EU. This broader coverage will show the consistency of the benefits of IFRS adoption. This study is most closely related to that of DeFond et al. (2011). This research extends DeFond’s study with some important differences as follows: it uses output-based and firm-specific measurement of the comparability from DeFranco et al. (2011), which is deemed to be more appropriate because it represents the qualitative characteristics of financial statements from a user’s perspective, i.e., investors, who evaluate historical performance and predict future performance in their investment decisions; it uses a broader scope of institutional investors; and it covers IFRS adoption in countries outside the EU for a longer observation period.

The impact of mandatory IFRS adoption on capital markets: evidence from Korea

2018 ◽  
Vol 26 (1) ◽  
pp. 38-58 ◽  
Author(s):  
Saerona Kim ◽  
Haeyoung Ryu
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Joint Effect ◽  
Equity Capital ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Content Type ◽  
Ifrs Adoption ◽  
The Cost ◽  
The Impact

Purpose The purpose of this paper is to examine the effects of adoption of the mandatory International Financial Reporting Standards (IFRS) on the cost of equity capital in a unique Korean setting. In Korea, individual financial statements were taken as primary financial statements. Before the adoption of IFRS, consolidated financial statements were taken as supplementary financial statements. Design/methodology/approach The authors measure the cost of equity using the average estimates from the implied cost of capital models proposed by Claus and Thomas (2001), Gebhardt et al. (2001), Easton (2004) and Ohlson and Juettner-Nauroth (2005), using it as the primary dependent variable. Mandatory IFRS adoption, the independent variable in this study, is assigned a value of 1 for the post-adoption period and 0 otherwise. Findings Using a sample of listed Korean companies during the period from 2000 to 2013, the authors find evidence of a significant reduction in the cost of equity capital in Korean listed companies after mandatory adoption of the IFRS in 2011, after controlling for a set of market variables. Originality/value This study is one of a growing body of literature on the relations between mandatory IFRS adoption and the cost of equity capital (Easley and O’Hara 2004; Covrig et al. 2007; Lambert et al. 2007; Daske et al. 2008). According to the results of this study, increased financial disclosure and enhanced information comparability, along with changes in legal and institutional enforcement, seem to have had a joint effect on the cost of equity capital, leading to a large decrease in expected equity returns.

The influence of IFRS mandatory adoption on value relevance of intangible assets in Italy

2020 ◽  
Vol 21 (3) ◽  
pp. 415-436
Author(s):  
Michela Cordazzo ◽  
Paola Rossi
Keyword(s):  
Intellectual Property ◽  
Research And Development ◽  
Stock Prices ◽  
Intangible Assets ◽  
Value Relevance ◽  
Accounting Standards ◽  
Content Type ◽  
Ifrs Adoption ◽  
Start Up ◽  
The Impact

PurposeFollowing the mandatory IFRS adoption in 2005, the Continental European accounting systems changed. This study investigates if it influenced the value relevance of intangible assets in Italy.Design/methodology/approachTo measure the value relevance of intangible assets of non-financial firms listed on Borsa Italiana from 2000 to 2015, this study isolates the impact of several classes of intangible assets on stock prices and then classifies firms according to intangible asset intensity.FindingsGoodwill, intellectual property and other rights, start-up costs or other intangible assets are significantly correlated with stock prices when Italian accounting standards were applied prior to 2005, whereas research and development expenditures are not associated with stock prices. The mandatory IFRS adoption has exerted positive effects only for goodwill and research and development expenditures, and it is negative for start-up costs. Further, when intangible-intensive firms are considered in the post-IFRS adoption period, declining value relevance exists relative to intellectual property and other rights or research and development expenditures; goodwill and other intangible assets increase in value relevance.Research limitations/implicationsThis study is subject to country-specific determinants and firm-specific characteristics. It treats accounting standards as exogenous, and the classification reflects the concentration of intangible assets in an industry. By relying on investors’ assessments of risk, it does not sufficiently explore the risk conveyed by future abnormal earnings and earnings volatility.Practical implicationsThis study offers insights for measuring and reporting intangible assets, by specifying that their value relevance depends on their level and aggregation.Originality/valueThis study investigates the value relevance of intangible assets in the post-IFRS period, in reference to intangible-intensive firms. It also divides intangible assets into several classes to specify the value relevance of goodwill.

Financial statement comparability in the extractive industry

2020 ◽  
Vol 33 (3) ◽  
pp. 523-541
Author(s):  
Christelle Smith ◽  
Elmar R. Venter
Keyword(s):  
Financial Reporting ◽  
Mineral Resources ◽  
Financial Statements ◽  
Financial Statement ◽  
Accounting Standard ◽  
Extractive Industry ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Cross Country

Purpose This paper aims to investigate financial statement comparability in the extractive industry. This paper focuses on the extractive industry because International Financial Reporting Standards (IFRS) contain limited guidance on the accounting treatment for exploration and evaluation (E&E) costs and IFRS 6 – Exploration for and Evaluation of Mineral Resources allowed firms to continue with existing divergent accounting treatment of E&E costs. Design/methodology/approach The authors use data from Australia, a country that adopted IFRS in 2005 with a large extractive industry. They also compare changes in cross-country comparability around the IFRS adoption date between Australian firms and adopters relative to Australian firms and non-adopters to better isolate changes in comparability that are attributable to the adoption of IFRS from other sources that are not related to the adoption of IFRS. The authors measure comparability consistent with De Franco et al. (2011) where financial statements are comparable when two firms produce similar accounting amounts for similar economic events. Findings For non-extractive industry firms, the authors find the comparability of financial statements of Australian firms increased with other adopters and that this increase was relatively greater than the increase with non-adopter firms. This evidence is consistent with comparability benefits associated with the adoption of IFRS. However, for extractive industry firms, the authors do not find a significantly greater increase in the comparability of financial statements of Australian firms with adopters relative to the increase with non-adopters, suggesting that the increase is likely not associated with the adoption of IFRS. In additional analysis, they find that following IFRS adoption non-extractive Australian firms have greater within-country comparability relative to extractive Australian firms, while there was no difference in the pre-adoption period. Originality/value The evidence suggests that the divergent practices for E&E costs under IFRS 6 and the lack of an accounting standard that deals with matters relating to the extractive industry hinder the comparability of financial statements in this industry.

Macroeconomic factors and stock prices in the food and drink industry

2019 ◽  
Vol 121 (7) ◽  
pp. 1627-1641
Author(s):  
Jana Šimáková ◽  
Daniel Stavárek ◽  
Tomáš Pražák ◽  
Marie Ligocká
Keyword(s):  
Interest Rates ◽  
Stock Prices ◽  
Stock Price ◽  
Global Financial Crisis ◽  
Supply And Demand ◽  
Macroeconomic Factors ◽  
Content Type ◽  
Food And Drink ◽  
The Global Financial Crisis ◽  
The Impact

Purpose The purpose of this paper is to estimate and evaluate the impact of macroeconomic fundamentals on stock prices of selected food and drink industry stocks during the period of 2005–2015, which saw the global financial crisis and its aftermath. Design/methodology/approach The paper employed correlation analysis and the Johansen cointegration test with the vector error correction mechanism for EU companies operating in the food and drink industry. The paper tested the effects of GDP, inflation and interest rates (IR) on the stock prices of companies from Austria, Croatia, Cyprus, Denmark, Finland, Germany, Ireland, Italy, Lithuania, Poland, Spain and the UK. Findings Based on the results, the authors can see that GDP has a generally positive effect on stock price development. In contrast, the relationship between stock prices and inflation and IR is negative in most cases. Originality/value Despite the fact that a majority of empirical research on companies in the food and drink sector was performed using the microeconomic approach, this paper used the macroeconomic approach and clearly demonstrated the effects of selected macro-variables on stock prices in selected EU markets. Macroeconomic factors shape the company’s performance and could potentially lead to persistent changes in supply and demand conditions in food and drink markets.

Financial performance and operating strategies of Malaysian property development companies during the global financial crisis

2017 ◽  
Vol 22 (2) ◽  
pp. 174-191 ◽  
Author(s):  
Toong Khuan Chan ◽  
Abdul-Rashid Abdul-Aziz
Keyword(s):  
Financial Crisis ◽  
Financial Performance ◽  
Global Financial Crisis ◽  
Financial Statements ◽  
Growth Strategies ◽  
Property Development ◽  
Operational Strategies ◽  
Content Type ◽  
Operating Strategies ◽  
The Impact

Purpose The purpose of this paper is to characterise the financial performance and to identify the operating strategies of property development companies in Malaysia during the 2008 global financial crisis (GFC). Design/methodology/approach The research approach includes a comprehensive analysis of the financial statements and annual reports of 35 property development companies listed on the Kuala Lumpur stock exchange. The financial statements were analysed to evaluate the financial performance of these companies and to assess the severity of the impact of the GFC on revenues and profits. The operating strategies were determined from a content analysis of the statement to shareholders. Findings An aggregated analysis of the financial performance indicates a 23 per cent decline in net profit in 2008. Classifying these companies into two separate sets of distressed and non-distressed companies showed that poor financial performance and a high debt-to-equity ratio pre-GFC led to continuing poor performance during the GFC period and beyond. Survival strategies adopted by distressed companies include the disposal of assets to improve cash flow, refinancing loans, delaying the launch of new projects and reducing their workforce. Non-distressed companies adopted growth strategies such as purchasing land for development, focusing their offerings towards high-end products, vertically integrating and diversification. Practical implications The increased understanding of the financial performance and operational strategies will allow managers of property development companies to improve financial management and adopt appropriate strategies in response to the impact of future financial distress. Originality/value The study presented in this paper is the first to analyse the financial performance of Malaysian public-listed property development companies during the period of the 2008 GFC and to link their financial performance to operational strategies.

scholarly journals THE IMPACT OF INTERNATIONAL FINANCIAL REPORTING STANDARD (IFRS) ADOPTION ON KEY FINANCIAL RATIOS IN NIGERIA

2020 ◽  
Vol 8 (4) ◽  
pp. 289-300
Author(s):  
Adedoyin Isola Lawal ◽  
Ezekiel Oseni ◽  
Abiola A. Babajide ◽  
Bukola Lawal-Adedoyin ◽  
Faith Bonetipin
Keyword(s):  
Financial Reporting ◽  
Unit Root Test ◽  
Financial Statements ◽  
Substantial Effect ◽  
Least Square ◽  
Financial Ratios ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Ifrs Adoption ◽  
The Impact

Purpose: This study examined the effects of the adoption of the International Financial Reporting Standard (IFRS) on the quality of financial statements of agro-allied firms in Nigeria. Methodology: Battery of unit root test techniques and co-integration tests were deployed to examine the existence of long-run impact of relevance and reliability of financial reporting as provoked by IFRS adoption. The study made use of Panel Fully Modified Least Square techniques to examine the nature of the relationship between the Pre-IFRS and Post-IFRS adoption periods. Main Findings: The study noted that IFRS adoption has a substantial effect on the reliability and relevance of financial statements. Implications: The findings of this study help in shedding light on the impact of the IFRS on financial statements' reliability and relevance of listed agro-allied firms in Nigeria. Novelty: This study offers a unique understanding of the impact of IFRS adoption on financial ratios in Nigeria.

Analysts’ forecasts timeliness and accuracy post-XBRL

2019 ◽  
Vol 27 (1) ◽  
pp. 151-188
Author(s):  
Sherwood Lane Lambert ◽  
Kevin Krieger ◽  
Nathan Mauck
Keyword(s):  
Critical Role ◽  
Forecast Accuracy ◽  
Financial Statements ◽  
Analyst Forecasts ◽  
Financial Statement ◽  
Future Research ◽  
Content Type ◽  
Cent Error ◽  
The Impact ◽  
The Relationship

Purpose To the authors’ knowledge, this paper is the first to use Detail I/B/E/S to study directly the timeliness of security analysts’ next-year earnings-per-share (EPS) estimates relative to the SEC filings of annual (10-K) and quarterly (10-Q) financial statements. Although the authors do not prove a causal relationship, they provide evidence that the average time from firms’ filings of 10-Ks and 10-Qs to the release of analysts’ annual EPS forecasts during short timeframes (for example, 15-day timeframe from a 10-K’s SEC file date) subsequent to the 10-K and 10-Q filing dates significantly shortened with XBRL implementation and then remained relatively constant following implementation. Design/methodology/approach Using filing dates hand-collected from the SEC website for 10-Ks during 2009-2011 and filing dates for 10-Ks and 10-Qs during 2003-2014 input from Compustat along with analysts’ estimated values for next year EPS, actual estimated next year EPS realized and estimate announcement dates in Detail I/B/E/S, the authors study the days from 10-K and 10-Q file dates to announcement dates and the per cent errors for individual estimates during per- and post-XBRL eras. Findings The authors find that analysts are announcing next-year EPS forecasts significantly more frequently and in significantly shorter time in zero to 15 days immediately following 10-K and 10-Q file dates post-XBRL as compared to pre-XBRL. However, the authors do not find a significant change in forecast accuracy post-XBRL as compared to pre-XBRL. Research limitations/implications Because this study uses short timeframes immediately following the events (filings of 10-Ks and 10-Qs), the relationship between 10-Ks and 10-Qs with and without XBRL and improved forecast timeliness is strengthened. However, even this strengthened difference-in-difference methodology does not establish causality. Future research may determine whether XBRL or other factors cause the improved forecast timeliness the authors’ evidence. Practical implications This improved efficiency may become critical if financial statement reporting expands as a result of new innovations such as Big Data and continuous reporting. In the future, users may be able to electronically connect to financial statement data that firms are maintaining on a perpetual basis on the SEC website and continuously monitor and analyze the financial statement data dynamically in real time. If so, then unquestionably, XBRL will have played a critical role in bringing about this future innovation. Originality/value Whereas previous studies have utilized Summary IBES data to assess the impact of XBRL on analyst forecasts, the authors use Detail IBES to study the effects of XBRL adoption directly by measuring days from 10-K and 10-Q file dates in Compustat to each estimate’s announcement date recorded in IBES and by computing the per cent error using each estimate’s VALUE and ACTUAL recorded in Detail IBES. The authors are the first to evidence a significant shortening in average days and an increase in per cent of 30-day counts in the zero- to 15-day timeframe immediately following the fillings of 10-K s and 10-Qs.

Impact of activity restrictions on risk taking of banks: does competition matter during crisis?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abu Hanifa Md. Noman ◽  
Che Ruhana Isa ◽  
Md Aslam Mia ◽  
Chan Sok-Gee
Keyword(s):  
Financial Crisis ◽  
Risk Taking ◽  
Global Financial Crisis ◽  
Policy Formulation ◽  
Macroeconomic Factors ◽  
Content Type ◽  
Dynamic Panel Regression ◽  
Generalised Method Of Moments ◽  
The Impact ◽  
Activity Restrictions

Purpose This study aims to examine the impact of activity restrictions in shaping the risk-taking behaviour of banks through the channel of competition in different economic conditions. Design/methodology/approach The authors use a dynamic panel regression method, particularly a two-step system generalised method of moments to address the risk-taking persistence of banks and endogeneity of activity restrictions and competition with banks’ risk-taking using financial freedom and property rights as instrumental variables. Activity restrictions are computed by constructing an index based on the survey results of Barth et al. (2001, 2006, 2008 and 2013a). Competition is measured by the Panzar–Rosse H-statistic and risk-taking behaviour are measured by non-performing loan ratio and lnZ-score. In the investigation process, the authors control bank characteristics – size, efficiency, ownership and loan composition and macroeconomic factors – gross domestic product growth and inflation, and use 2,527 bank-year observations from 180 commercial banks of Association of the Southeast Asian Nations-five countries over the 1990–2014 period. Findings This study finds that activity restrictions exacerbate the risk-taking behaviour of the banks leading to changes in the channel of competition because of the “risk-shifting effect” of competition. The finding is robust by considering the financial crisis and alternative specifications. Research limitations/implications This study contributes to bank literature and policy formulation regarding the effect of activity restrictions on the risk-taking behaviour of banks, which is an issue of concern amongst bank regulators, policymakers and academics, especially in the aftermath of the 2008–2009 global financial crisis. Practical implications Understanding how the competition plays a role in the relationship between activity restrictions and the risk-taking of banks in different economic situations. Originality/value This study provides new insight into the bank literature by investigating the moderating role of competition on activity restrictions and the risk-taking behaviour of banks in a different economic environment.

The effect of monetary policy announcements and government interventions on the US insurance industry during the 2007-2009 crisis

2017 ◽  
Vol 18 (5) ◽  
pp. 500-522 ◽  
Author(s):  
Martin F. Grace ◽  
Jannes Rauch ◽  
Sabine Wende
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Stock Prices ◽  
Content Type ◽  
Insurance Sector ◽  
Second Stage ◽  
Policy Interventions ◽  
Insurance Firms ◽  
Stage Analysis ◽  
The Impact

Purpose The authors aim to analyze the impact of monetary policy interventions during the financial crisis of 2007-2009 on the stock prices of US insurance firms. Design/methodology/approach The authors use an event study methodology and a database of 89 policy announcements to analyze if monetary policy interventions could restore stability in the insurance sector. In addition, the authors conduct a second-stage analysis to identify the individual firms’ determinants of their stock market response. Findings The results indicate that the market reaction depends upon the type of policy intervention as well as the timing of the intervention. A second stage analysis examines firm level determinants of the insurers’ stock price responses and finds various firm specific factors also affect the insurers’ reaction to policy interventions. Originality/value First, to the best of the authors’ knowledge, this paper is the first to examine the impact of non-conventional policy announcements on firms from the insurance sector during the financial crisis. Moreover, the authors add to the literature an analysis on how conventional central bank announcements affect insurance firms.

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