Mandatory adoption of IFRS and cost of capital: does country classification matter Evidence from developed versus developing countries

2021 ◽  
Vol 7 (3) ◽  
pp. 269
Author(s):  
Solomon George Zori
Keyword(s):  
Developing Countries ◽  
Cost Of Capital ◽  
Mandatory Adoption

scholarly journals IFRS Adoption in Developing Countries: What Is the Impact?

2018 ◽  
Vol 8 (2) ◽  
pp. 278
Author(s):  
Chris D. Gingrich ◽  
Leah Kratz ◽  
Ryan Faraci
Keyword(s):  
Developing Countries ◽  
Financial Reporting ◽  
Business Leaders ◽  
Global Competitiveness ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Accounting Environment ◽  
Mandatory Adoption ◽  
The Impact ◽  
Financial Environment

This study explores the impact of mandatory adoption of the International Financial Reporting Standards (IFRS) in developing countries on business leaders’ perceptions of the overall accounting and financial environment. The study employs survey data from the World Economic Forum’s Global Competitiveness Report to gauge business leaders’ perceptions of the accounting and financial environment. Eight countries across Latin America, Africa, and Asia comprise case studies, all of whom recently adopted mandatory IFRS use for publicly listed companies. Each survey variable is tracked over time, comparing pre and post IFRS adoption, vis-à-vis the same variable in a control country that did not adopt IFRS. IFRS adoption shows mostly positive impacts on the accounting environment in four cases. The impact of adoption in the other three countries is mostly insignificant. These results should encourage policymakers in developing countries to improve auditing and enforcement practices to increase the likelihood of positive results from IFRS adoption.

scholarly journals IFRS and Financial Performance: Study in the French Context

2020 ◽  
Vol 11 (2) ◽  
pp. 424
Author(s):  
Hela Turki ◽  
Senda Wali ◽  
Zahra Tajuddin Abdelgader Ali ◽  
Mona Hassab Elrasoul Mohammed
Keyword(s):  
Financial Performance ◽  
Direct Effect ◽  
Structural Equation ◽  
Cost Of Capital ◽  
International Standards ◽  
Equation Method ◽  
Performance Study ◽  
Indirect Impact ◽  
Mandatory Adoption ◽  
The Cost

This article examines the direct and indirect impact of the IFRS mandatory adoption on the financial performance of companies. The structural equation method has been applied to all companies that belong to the CAC All tradable index for the period from 2002 to 2012. By measuring financial performance by three measures, namely the Marris ratio, the Tobin Q and the PER ratio, the results show that the imposition of the international standards has no direct effect on the financial performance, its effect is indirect via the cost of capital.

scholarly journals The role of cost of capital in regulatory capital discrepancies among developing countries

2015 ◽  
Vol 18 (1) ◽  
pp. 84-104
Author(s):  
Johann Jacobs ◽  
Gary Van Vuuren
Keyword(s):  
Developing Countries ◽  
Financial Institutions ◽  
Cost Of Capital ◽  
Capital Requirements ◽  
Regulatory Capital ◽  
Geographical Regions

Capital as a regulatory instrument has been shown to contribute to competitiveness distortions between developed and developing countries. There is a dearth of literature that analyses the possibility of further competitiveness discrepancies to which capital requirements may contribute among developing countries.This article explores whether regulatory capital requirements lead to unequal competitive conditions between developing countries based on their costs of capital. It also attempts to identify drivers of such discrepancies. Data of 52 financial institutions from 20 countries spread across 4 geographical regions are used for the analysis. 

scholarly journals Information Asymmetry in the Post-IFRS Adoption Period: Evidence from Developing Countries

2018 ◽  
Vol 3 (4) ◽  
pp. 114-123
Author(s):  
Juniarti Juniarti ◽  
Beatrice Marcellina ◽  
Alvita Angela
Keyword(s):  
Developing Countries ◽  
Information Asymmetry ◽  
Cost Of Capital ◽  
Developed Countries ◽  
The Philippines ◽  
Jel Classification ◽  
Listed Firms ◽  
Ifrs Adoption ◽  
Bid Ask Spread ◽  
The Cost

Objective - The adoption of IFRS aims to reduce the level of information asymmetry. Prior studies conducted in developed countries prove that the adoption of IFRS enhances transparency and diminishes information asymmetry. However, in developing countries with a low level of openness, limited regulation, and more centralized ownership, the ability of IFRS to reduce information asymmetry remains unknown. To address this issue, this study aims to investigate whether IFRS adoption will reduce information asymmetry in some developing countries in South East Asia. Methodology/Technique - This research is applied in three developing countries: Indonesia, the Philippines and Thailand. Information asymmetry is proxied by the cost of capital using the Easton model (2004) and a bid-ask spread. Listed firms from the three countries are selected as the research sample resulting in 5.313 firm-years for the period between 2007 and 2016. Findings - This study concludes that the adoption of the IFRS decreases information asymmetry in developing countries. These finding confirm that the benefit of the adoption is the same as in developed countries, despite the level of law enforcement in developing countries being lower. Managers, standard authorities and investors must note that the IFRS conveys benefits to the market, which increases transparency by asking lower returns and valuing company stocks appropriately. Novelty - This study examines the benefits of the adoption of the IFRS in reducing information asymmetry in some emerging countries to enhance the generalization of the results from prior studies that are mostly conducted in developed countries. Type of Paper Empirical Keywords: Bid-ask Spread; Cost of Capital; Information Asymmetry; IFRS Adoption. JEL Classification: M41, M48.

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