The Cross-Country Comparability of IFRS Earnings and Book Values: Evidence from France and Germany

2012 ◽  
Vol 11 (1) ◽  
pp. 155-184 ◽  
Author(s):  
Qing Liao ◽  
Thorsten Sellhorn ◽  
Hollis A. Skaife
Keyword(s):  
Financial Reporting ◽  
Financial Information ◽  
Financial Reports ◽  
Financial Reporting Standards ◽  
Eu Member States ◽  
Cross Country ◽  
The Cross ◽  
Book Values ◽  
The Eu ◽  
Ifrs Implementation

ABSTRACT Beginning in 2005, the EU began requiring consolidated financial reports of publicly traded firms to be prepared in accordance with EU-endorsed International Financial Reporting Standards (IFRS) in an effort to increase the comparability of financial information across EU Member States. While some expect IFRS reporting to increase the comparability of financial information across the EU, others argue that comparability is unlikely because IFRS implementation will vary conditional on national institutions and culture. We investigate the cross-country comparability of IFRS earnings and book values of French and German firms because these two EU states have well-developed equity markets and use the same currency, while having social-economic and cultural differences that can affect managers' IFRS implementation choices. Our results indicate that French and German IFRS earnings and book values are comparable in the year subsequent to IFRS adoption, but become less comparable in the years that follow. We document differences in accounting estimates, recognition of special items, and other equity reserves between French and German firms that help explain the decrease in comparability over time. Our study adds to the growing literature on the financial statement effects of mandatory IFRS reporting, and points to possible reasons for a sustained lack of cross-country comparability of financial information under a common accounting regime. JEL Classifications: G12, G14, G38, K22, M41, M42, M48

scholarly journals Non-financial reporting in selected European countries

2021 ◽  
pp. 73-90
Author(s):  
Nikolina Dečman ◽  
Petr Petera ◽  
Marzena Remlein ◽  
Ana Rep
Keyword(s):  
Financial Reporting ◽  
Financial Information ◽  
Annual Reports ◽  
Professional Background ◽  
Financial Reports ◽  
The Czech Republic ◽  
Eu Member States ◽  
Eu Directive ◽  
The Republic ◽  
The Eu

Directive 2014/95/EU gave the EU Member States a certain flexibility when transposing it into national law. Each Member State could, therefore, decide to introduce regulations of varying degrees of stringency. According to Directive 2014/95/EU, large companies have to publish reports on the policies they implement in relation to environmental protection, social responsibility and treatment of employees, respect for human rights, anti-corruption and bribery, diversity on company boards (in terms of age, gender, educational and professional background).In order to satisfy the EU rules, the Republic of Croatia has implemented into its legislation the provisions of the Directive 2014/95/EU regarding the disclosure of certain non-financial reporting, by amending the Accounting Act. Some companies registered in Croatia have been disclosing some of the required non-financial information in their reports even before the effective date of the Direc-tive, but conducted studies conclude that there is still a room for improvements.This chapter provides a short overview of regulation of non-financial reporting in the Czech Republic as well as overview of previous research on non-financial reporting in this country. The results of the research present that few Czech companies publish standalone corporate responsi-bility report. More popular is the disclosure of non-financial information within annual financial reports but even this approach is pursued by less than half of respondents. The amount of disclosed information in annual reports is mostly up to 5 pages. 11 companies (10.38%) provide more than 5 pages of environmental information and only 7 companies (6.60%) provide more than 5 pages of social information.In Poland, the requirement to present non-financial information relating to CSR was introduced by the Accounting Act. Public trust entities are required to present in the report on the activities a separate part called “Statement on non-financial information”. In 2017, the Polish Standard of Non-Financial Information (SIN, 2017) was published to help enterprises fulfil their obligations under the EU Directive.

scholarly journals DE JURE HARMONIZATION OF FINANCIAL REPORTING FOR LISTED COMPANIES: EVIDENCE FOR SELECTED CEE COUNTRIES

2021 ◽  
Vol 6 (1) ◽  
pp. 137-146
Author(s):  
Dijana Perkušić ◽  
◽  
Ivica Pervan
Keyword(s):  
Financial Reporting ◽  
Listed Companies ◽  
Influential Factors ◽  
Reporting Standards ◽  
Regulatory Requirements ◽  
Financial Reports ◽  
Financial Reporting Standards ◽  
Country Level ◽  
Eu Integration ◽  
The Eu

Globalization of business and free flow of capital resulted in strong demand for comparable financial reports worldwide. An important element of achieving de facto harmonization of financial reporting is de jure harmonization, i.e. harmonization of regulatory requirements on the country level. Although more than 100 countries have a requirement for use of IFRS (International Financial Reporting Standards) for listed companies, de facto harmonization is still an ongoing process. De facto harmonization is affected by many influential factors, among which de jure harmonization represents one of the most important factors. For the purpose of the study, the authors developed an index of de jure harmonization (IDJH) based on the EU regulatory framework and evaluated its value for 5 CEE countries (Croatia, Bosnia & Herzegovina, Montenegro, Slovenia and Serbia). Empirical findings reveal significant differences in de jure harmonization, related to the country's status in relation to EU integration processes. Keywords: de jure harmonization, financial reporting, CEE countries

scholarly journals Adoption of International Financial Reporting Standards (IFRS) in Ghana and the Quality of Financial Statement Disclosures

2014 ◽  
Vol 3 (2) ◽  
pp. 269 ◽  
Author(s):  
Ben Kwame Agyei-Mensah
Keyword(s):  
Regression Analysis ◽  
Financial Reporting ◽  
Firm Size ◽  
Financial Statements ◽  
Financial Information ◽  
Reporting Standards ◽  
Financial Reports ◽  
Listed Firms ◽  
Financial Reporting Standards

According to the IASB's IFRS framework, qualitative characteristics are the attributes that make the information provided in financial statements useful to others. This study was conducted to investigate the quality of financial reports before and after adopting IFRSs in Ghana, and also the influence of firm-specific characteristics which include firm size, profitability, debt equity ratio, liquidity and audit firm size on the quality of financial information disclosed by firms listed on the Ghana Stock Exchange.The research was conducted through detailed analysis of the pre-official adoption period, (2006) and post adoption period, (2008) financial statements of the listed firms.  Descriptive analysis was performed to provide the background statistics of the variables examined.  This was followed by regression analysis which forms the main data analysis.  The results of the quality of financial information disclosure mean of 76.80% (pre adoption) and 87.09% (post adoption) for the two years indicate that the quality of financial reports has improved significantly after adopting IFRSs. The study thus confirms that the implementation of IFRSs generally reinforce accounting disclosure quality.  It also indicates listed firms' overwhelming compliance with the IASB's IFRS Framework.The results of the multiple regression analysis show that company size, represented by net assets and Auditor type were found to be associated at a statistically significant level with the quality of financial information disclosed.  With the improvement in the quality of the financial reports after adopting IFRS users are assured of useful information for financial decision-making.Keywords: Quality of financial reports' disclosure, Firm-specific characteristics, International Financial Reporting Standards, Mandatory disclosure, Ghana. JEL Classifications: M40, M41, M48

scholarly journals The three pillars of institutional theory and IFRS implementation in Nigeria

2020 ◽  
Vol 10 (4) ◽  
pp. 575-599
Author(s):  
Igbekele Sunday Osinubi
Keyword(s):  
Institutional Theory ◽  
Financial Reporting ◽  
Implementation Process ◽  
Financial Reports ◽  
Content Type ◽  
Reporting Practices ◽  
Financial Reporting Standards ◽  
Institutional Entrepreneur ◽  
Institutional Actors ◽  
Ifrs Implementation

PurposeThis study explores the effects of the three pillars of institutional theory in shaping the activities of institutional entrepreneurs and other social actors during International Financial Reporting Standards (IFRS) implementation in Nigeria.Design/methodology/approachThis study uses a document analysis method to achieve the objectives of the study.FindingsThis study finds that IFRS implementation in Nigeria witnessed some progression from regulative to normative to cognitive pillar building. The regulation on IFRS implementation was initiated top-down rather than through lobbying from professional accounting bodies and the public. Changes in the regulatory framework brought some improvement to corporate financial reporting practices such as the timing of corporate filings of audited financial reports. However, the implementation process is laden with conflicts and power struggle among institutional actors. These conflicts and power struggles led the President of Nigeria to sack the Board of the Financial Reporting Council of Nigeria (FRC), the reconstitution of the Board and appointment of a Chairman for the Board of the FRC.Practical implicationsIFRS implementation process resulted in power redistribution among institutional actors, which led to resistance, tensions and conflicts among institutional actors. The conflicts arise from the need of actors to legitimate their activities and secure their positions. The three institutional pillars are key components of a change process and the actor's social position affects their capability to act as an institutional entrepreneur.Originality/valueThis finding should provide foundational knowledge that will inform practitioners, researchers and regulators in developing countries on how institutional actors shape the approach to corporate reporting regulations.

scholarly journals Non-financial reporting by an international corporation in the light of new mandatory regulations

2020 ◽  
Vol 109 (165) ◽  
pp. 105-138
Author(s):  
Arleta Szadziewska ◽  
Beata Kotowska ◽  
Lina Kloviene ◽  
Sergiy Legenchyk ◽  
Darija Prša ◽  
...  
Keyword(s):  
Content Analysis ◽  
Financial Reporting ◽  
Financial Indicators ◽  
Financial Reports ◽  
Eu Member States ◽  
Wide Range ◽  
International Corporation ◽  
Definition Of ◽  
The Impact ◽  
The Eu

Purpose: Directive 2014/95/EU gave the EU Member States a certain flexibility when transposing it into national law. Each Member State could, therefore, decide to introduce regulations of varying degrees of stringency. Thus, the purpose of the article is: 1) to indicate the main differences in the implementation of the Directive and the national provisions in countries selected for the study; 2) to determine and compare the range of non-financial indicators published by branches of an international corporation that operates in the selected countries, after the introduction of changes to the reports; 3) to determine differences in the reporting of non-financial ratios existing between entities operating within one capital group in the EU and outside of it. Methodology/approach: Comparative analysis and content analysis were used to achieve the objectives of the article. Findings: The results suggest that countries should adopt into their national laws various items, including the definition of a large entity that is required to make non-financial disclosures, the need for external verification of this type of information, and the adoption of sanctions for failing to publish such information. The content analysis of individual branches’ non-financial reports also revealed a wide range of non-financial indicators. What is more, significant differ-ences were found between the scope of the non-financial indicators published by the capital group and those of its subsidiaries. Originality/value: To date, little research has been done on the impact of this regulation on the practice of non-financial reporting. Our research, therefore, expands the knowledge on the subject, despite the fact it does not cover a large number of enterprises. It constitutes a new approach to non-financial disclosure analysis since the study covers non-financial reports of a capital group and its subsidiaries that operate in different countries.

scholarly journals Reliability of Financial Information from the Perspective of Benford’s Law

Entropy ◽  
2021 ◽  
Vol 23 (5) ◽  
pp. 557
Author(s):  
Ionel Jianu ◽  
Iulia Jianu
Keyword(s):  
Financial Reporting ◽  
Capital Market ◽  
Financial Statements ◽  
Financial Information ◽  
Benford’S Law ◽  
Professional Judgment ◽  
Reporting Standards ◽  
Financial Reporting Standards ◽  
Benford's Law ◽  
Before And After

This study investigates the conformity to Benford’s Law of the information disclosed in financial statements. Using the first digit test of Benford’s Law, the study analyses the reliability of financial information provided by listed companies on an emerging capital market before and after the implementation of International Financial Reporting Standards (IFRS). The results of the study confirm the increase of reliability on the information disclosed in the financial statements after IFRS implementation. The study contributes to the existing literature by bringing new insights into the types of financial information that do not comply with Benford’s Law such as the amounts determined by estimates or by applying professional judgment.

scholarly journals Assurance on non-financial reporting: theoretical underpinning, standards and practices of companies operating in Western and Eastern Europe

2021 ◽  
Vol 45 (1) ◽  
pp. 53-74
Author(s):  
Joanna Krasodomska ◽  
Paweł Zieniuk
Keyword(s):  
Eastern Europe ◽  
Financial Reporting ◽  
Western Europe ◽  
Information Assurance ◽  
Financial Information ◽  
Research Approach ◽  
Eastern European ◽  
Financial Reports ◽  
Sustainability Disclosure ◽  
Big Four

Objective: The paper presents the issue of non-financial information assurance and identifies the practices of companies operating in Europe in this regard. Methodology/research approach: The research is based on a literature review and analysis of a sample of 935 companies whose non-financial reports, prepared according to the GRI guidelines, are available from the GRI Sustainability Disclosure Database. In particular, we analyze how many companies had their non-financial information verified in 2017 and their previous practice in this regard (since 2005), as well as their structure according to the assuror type, the assurance standard used, the engagement type, and the assurance scope. Findings: Nearly half of the companies had their non-financial information independently and externally verified, including 34 Eastern European companies (30%) and 426 from Western Europe (52%). Most of the entities which provide assurance are so-called Big Four audit companies, mainly Deloitte and E&Y, which use the ISAE 3000 standard for this purpose. The most common engagement type is limited engagement. Limitations: The study is descriptive, which results from the nature of the data collected and the large disparity between companies using assurance in Western and Eastern Europe. Originality/value: The Article broadens accounting knowledge, in particular, on non-financial reporting. It indicates the need to take steps towards the wider use of non-financial information assurance in Eastern Europe.

scholarly journals Adoption of IFRS in Ecuador and Colombia 2010-2016

2019 ◽  
Vol 16 (1-1) ◽  
pp. 178-184 ◽  
Author(s):  
José Villanueva García ◽  
Carmen Cordova Román ◽  
Maria Teresa Cuenca Jiménez
Keyword(s):  
Financial Reporting ◽  
Research Work ◽  
Balance Sheet ◽  
Accounting Standards ◽  
Nonparametric Test ◽  
Financial Information ◽  
International Accounting Standards ◽  
Financial Reporting Standards ◽  
Before And After ◽  
Mandatory Adoption

The International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB), have been adopted by a large number of countries, since they are considered an international benchmark for obtaining comparable quality financial information. The adoption by Ecuador and Colombia of IFRS as a transition from their previous local regulations based on provisions and decrees, justifies the present research work to provide knowledge of the regulatory reality of both countries. Behind this ambitious adoption of accounting standards, since they are costly processes both financially and in terms of training, there is a need to obtain consistent financial information that should attract investments and facilitate access to other less harmful financial markets. The purpose of this research is to perform an analysis of the effect on the accounting variables of the balance sheet and financial ratios, before and after the application of IFRS on large Ecuadorian and Colombian companies. To do this, Wilcoxon’s nonparametric test of related samples is used, on a total of 204 Ecuadorian companies and 60 Colombian companies. To compare the results of both countries, a non-parametric U Mann-Whitney test is carried out. The results show an impact in both countries on the variables studied after the mandatory adoption of IFRS, although the relative impact is greater in the Colombian case.

A Cross-Country Empirical Investigation of Corruption and its Relationship to Economic, Cultural, and Monitoring Institutions: An Examination of the Role of Accounting and Financial Statements Quality

2002 ◽  
Vol 17 (4) ◽  
pp. 325-350 ◽  
Author(s):  
Marinilka Barros Kimbro
Keyword(s):  
Financial Reporting ◽  
Empirical Investigation ◽  
Financial Statements ◽  
Financial Accounting ◽  
Accounting Systems ◽  
Financial Reporting Standards ◽  
Information Monitoring ◽  
Per Capita ◽  
Cross Country

This paper empirically tests a model that links economic, cultural, and information/monitoring variables to corruption in 61 countries. The results offer significant evidence to suggest that higher GNP per capita, moderate economic growth, effective legal and financial accounting systems, collectivist values and low power distance are associated with countries that have low corruption. Countries that have better laws, more effective judiciary, good financial reporting standards, and a higher concentration of accountants are found to be less corrupt.

A Study of International Financial Reporting Standards (IFRS) Implementation in Indonesia: The Preparers' Perspectives

2016 ◽  
Vol 4 (1) ◽  
pp. 31-37
Author(s):  
Asniati Bahari ◽  
Suhernita Suhernita ◽  
Elvira Luthan ◽  
Efa Yonnedi
Keyword(s):  
Financial Reporting ◽  
Financial Accounting ◽  
Strategic Decision ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Manufacturing Companies ◽  
Factual Information ◽  
Financial Reporting Standards ◽  
Before And After ◽  
Ifrs Implementation

Objective - This study is intended to explore the factual information; cost of implementation; general impact of implementation; progress to date; operational and strategic decision taken by management; implementation and impact of individual standards; and general other related to IFRS implementation in Indonesia by comparing before and after IFRS implementation. Methodology/Technique - Data were collected by using content analysis from annual reports of manufacturing companies listed in the Indonesian Stock Exchange and analyzed by using SPSS. Findings - Statistical analysis showed that in Indonesia, the average number of pages that reveal category of operational and strategic decision taken by management; implementation and impact of individual standard; and general other differ between before and after the implementation of IFRS, but not for factual information and general impact of information. In addition, there is a significant difference in the average of number of listed manufacturing companies report category of progress to date; operational and strategic decision taken by management; and general other between before and after the implementation of IFRS-based Financial Statements. Novelty - Findings of this research can serve as a guideline for companies in Indonesia and other developing countries in implementing the IFRS. The findings will also contribute to the knowledge and application of Financial Accounting System and Accounting Theory. Type of Paper - Empirical Keywords: International Financial Reporting Standards; Indonesian Financial Accounting Standards; IFRS implementation; and Manufacturing Companies.

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