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.

A Review of the Literature on IFRS Adoption From the Perspective of the Value Relevance

2019 ◽  
pp. 367-394 ◽  
Author(s):  
Melik Ertuğrul
Keyword(s):  
Literature Review ◽  
Financial Reporting ◽  
Value Relevance ◽  
The European Union ◽  
Archival Research ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Comprehensive Picture ◽  
Mandatory Adoption ◽  
The Impact

International Financial Reporting Standards (IFRS)-based financial reporting has become widespread all around the world especially after its mandatory adoption in the European Union in 2005. There are several objectives of IFRS-based financial reporting, all of which depends on the idea of a single set of high-quality standards as frequently highlighted by promoters of IFRS. This literature review depicts a comprehensive picture of the archival research on the impact of IFRS-based reporting on capital markets from the perspective of the value relevance (VR) concept. First, the VR concept, as well as models employed to measure the VR, are described. Afterwards, selected studies of the archival research are grouped, summarized, and discussed. Finally, archival research is methodologically analyzed by considering different dimensions. All in all, this literature review provides information on IFRS adoption from the perspective of the VR.

IFRS adoption and accounting conservatism in Latin America

2020 ◽  
Vol 33 (3/4) ◽  
pp. 301-320
Author(s):  
Harold Lopez ◽  
Mauricio Jara ◽  
Adriana Cabello
Keyword(s):  
Latin America ◽  
Latin American ◽  
Financial Reporting ◽  
Accounting Conservatism ◽  
Content Type ◽  
Listed Firms ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Mandatory Adoption ◽  
The Impact

Purpose The purpose of this paper is to analyze the impact of IFRS mandatory adoption on accounting conservatism and to shed light on the drivers of such impact. Design/methodology/approach Using a sample of listed firms for five Latin American countries, the authors analyze the relation between mandatory adoption of International Financial Reporting Standards and the conditional accounting conservatism of earnings. Findings The authors find evidence that IFRS adoption boosts earnings conservatism. This result is robust and heterogeneous. The results also show that the effect of IFRS differs across firms and countries. Specifically, the impact of IFRS adoption is higher for low-earnings-quality firms and for firms with high levels of investment opportunities. Practical implications The results suggest that IFRS adoption in Latin America has enhanced comparability of financial information both across and within countries. Originality/value This paper contributes to the literature by providing new evidence on the drivers of the impacts of IFRS adoption in emerging markets.

scholarly journals The impact of IFRS-based accounting standards on earnings management: evidence from Malaysia

2016 ◽  
Vol 5 (1) ◽  
pp. 1
Author(s):  
Yosra Makni Fourati ◽  
Rania Chakroun Ghorbel
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Emerging Market ◽  
Accounting Standards ◽  
Absolute Value ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Earning Quality ◽  
The Impact ◽  
Different Levels

This study aims to examine the consequences of International Financial Reporting Standards (IFRS) convergence in an emerging market. More specifically, we investigate whether the adoption of the new set of accounting standards in Malaysia is associated with lower earnings management. Using a sample of 3,340 firm-year observations across three reporting periods with different levels of IFRS adoption, we provide evidence that IFRS convergence improves earning quality. In particular, we find a significant decrease in the absolute value of discretionary acccruals in the partial IFRS-convergence period (2007-2011), whereas this effect is restrictive after the complete IFRS- implementation.

scholarly journals IMPACT OF ADOPTING IFRS STANDARD ON THE EQUITY COST OF BRAZILIAN OPEN CAPITAL COMPANIES

2016 ◽  
Vol 17 (4) ◽  
pp. 85-108 ◽  
Author(s):  
RAFAEL CONFETTI GATSIOS ◽  
JOSÉ MARCOS DA SILVA ◽  
MARCELO AUGUSTO AMBROZINI ◽  
ALEXANDRE ASSAF NETO ◽  
FABIANO GUASTI LIMA
Keyword(s):  
Financial Reporting ◽  
Accounting Standard ◽  
Financial Reporting Standards ◽  
Quality Of Accounting Information ◽  
Information Studies ◽  
Equity Cost ◽  
Mandatory Adoption ◽  
The Difference ◽  
Methodological Aspects ◽  
The Impact

ABSTRACT Purpose: This study aims to assess the impact of adopting IFRS standard on the equity cost of Brazilian open capital companies in the period of 2004-2013. Originality/gap/relevance/implications: The adoption of International Financial Reporting Standards aims to increase the quality of accounting information. Studies performed in Europe suggest that, after the adoption of the IFRS standard, there was a reduction in the equity cost of companies due to the reduction of information asymmetry and risk. Key methodological aspects: The equity cost was calculated using the capital asset pricing model (CAPM) adapted to the Brazilian case. The empirical strategy was the difference analysis in differences, comparing the results of companies that voluntarily adopted the IFRS with companies that adopted IFRS after the mandatory adoption period. Summary of key results: The results indicate that the adoption of the IFRS standard does not contribute to reduce the equity cost in Brazil. Key considerations/conclusions: Suggesting that the process of adopting the international accounting standard may take more time to impact the equity cost of Brazilian open capital companies, since the impact of IFRS is not related only with the adoption, but also with its use by companies and users.

scholarly journals International financial reporting standards (IFRS) adoption and oil & gas companies performance in Nigeria

2017 ◽  
Vol 5 (2) ◽  
pp. 146 ◽  
Author(s):  
Aminu Abdullahi ◽  
Musa Yelwa Abubakar ◽  
Sunusi Sa’ Ad Ahmad
Keyword(s):  
Financial Reporting ◽  
Oil And Gas ◽  
Reporting Quality ◽  
Easy Access ◽  
Debt Ratio ◽  
Return On Equity ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Mandatory Adoption ◽  
Oil And Gas Companies

This study investigates the effect of IFRS adoption on the performance of oil and gas marketing companies in Nigeria. The study utilise financial statements of a sample of eight (8) oil and gas companies operating in the country. These companies were purposively selected due to availability of data. Firms’ performance was proxied by Profit Margin (PM), Return on Assets (ROA) and Return on Equity (ROE) ratios and were considered as dependent variables to be determined by reporting regime (RR) as independent variable. While Current Ratio (CR), quick Test (QT), Total Debt Ratio (TDR) Earnings per Share (EPS) and Equity Debt Ratio (EDR) are use as control variables. The ratios were computed and compared for 4 years (2010 to 2011) before mandatory IFRS adoption and 2012 to 2013 often mandatory adoption OLS, regression with help of eviews 9 was employed for the analysis. The study reveals IFRS adoption has not improved the performance of oil and gas companies in Nigeria. The paper recommended that, oil and gas companies should continue to comply with provisions of IFRS as it will improve their reporting quality which may also improve their performance as result of more investment flow, easy access to capital and comparability.

The Phoenix Rises: The Australian Accounting Standards Board and IFRS Adoption

2017 ◽  
Vol 16 (2) ◽  
pp. 127-154 ◽  
Author(s):  
Bryan Howieson
Keyword(s):  
Financial Reporting ◽  
Social Order ◽  
Standard Setting ◽  
International Standards ◽  
Technical Staff ◽  
Staff Members ◽  
Political Skills ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
The Impact

ABSTRACT The Australian experience of International Financial Reporting Standards (IFRS) is used to explore the impact of IFRS adoption on the sphere of authority (SOA) of a national accounting standard-setter (NASS). Data for the study were gathered from interviews with AASB technical staff and retired IASB members. The study demonstrates how changes in the social order between the IASB and NASSs impact domestic and international standards and how power is exercised and shared in the IASB/NASSs relationship. I find that a standard-setter's technical agenda is influenced by its strategic agenda. I show the significant influence of the standard-setting entity's chairperson on the development and implementation of the strategic agenda. In addition, individual technical staff members help drive this agenda. Knowledge of the behavior of standard-setting organizations can be considerably deepened by studying the characteristics and motivations of the individuals within those organizations. The findings are useful to NASSs by, for example, demonstrating the importance of employing individuals with both strong technical and political skills. If NASSs wish to have influence at the global level, then they must be proactive in driving change through networks and alliances with other NASSs.

Does Mandatory IFRS Adoption Improve Information Comparability?

2012 ◽  
Vol 87 (5) ◽  
pp. 1767-1789 ◽  
Author(s):  
Rita W. Y. Yip ◽  
Danqing Young
Keyword(s):  
Financial Reporting ◽  
Information Transfer ◽  
Institutional Environment ◽  
Data Availability ◽  
The European Union ◽  
Accounting Data ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Mandatory Adoption ◽  
Cross Country

ABSTRACT This study examines whether the mandatory adoption of International Financial Reporting Standards (IFRS) in the European Union significantly improves information comparability in 17 European countries. We employ three proxies—the similarity of accounting functions that translate economic events into accounting data, the degree of information transfer, and the similarity of the information content of earnings and of the book value of equity—to measure information comparability. Our results suggest that mandatory IFRS adoption improves cross-country information comparability by making similar things look more alike without making different things look less different. Our results also suggest that both accounting convergence and higher quality information under IFRS are the likely drivers of the comparability improvement. In addition, we find some evidence that cross-country comparability improvement is affected by firms' institutional environment. Data Availability: Data are available from commercial providers (Worldscope, DataStream, and I/B/E/S).

The Impact of Mandatory IFRS Adoption on Audit Fees: Theory and Evidence

2012 ◽  
Vol 87 (6) ◽  
pp. 2061-2094 ◽  
Author(s):  
Jeong-Bon Kim ◽  
Xiaohong Liu ◽  
Liu Zheng
Keyword(s):  
Financial Reporting ◽  
Reporting Quality ◽  
Audit Fees ◽  
Data Availability ◽  
Financial Reporting Quality ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Audit Fee ◽  
European Union Countries ◽  
The Impact

ABSTRACT: This study examines the impact of International Financial Reporting Standards (IFRS) adoption on audit fees. We first build an analytical audit fee model to analyze the impact on audit fees for the change in both audit complexity and financial reporting quality brought about by IFRS adoption. We then test the model's predictions using audit fee data from European Union countries that mandated IFRS adoption in 2005. We find that mandatory IFRS adoption has led to an increase in audit fees. We also find that the IFRS-related audit fee premium increases with the increase in audit complexity brought about by IFRS adoption, and decreases with the improvement in financial reporting quality arising from IFRS adoption. Finally, we find some evidence that the IFRS-related audit fee premium is lower in countries with stronger legal regimes. Our results are robust to a variety of sensitivity checks. Data availability: Data are available from public sources identified in the paper.

The Impact of Mandatory IFRS Adoption on Accounting Quality: Evidence from Australia

2012 ◽  
Vol 11 (1) ◽  
pp. 119-146 ◽  
Author(s):  
Yi Lin Chua ◽  
Chee Seng Cheong ◽  
Graeme Gould
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Value Relevance ◽  
Accounting Quality ◽  
Generally Accepted Accounting Principles ◽  
Financial Reporting Standards ◽  
Financial Firms ◽  
Wide Range ◽  
Mandatory Adoption ◽  
The Impact

ABSTRACT Following the mandatory implementation of International Financial Reporting Standards (IFRS) in Australia as of January 1, 2005, this study examines its impact on accounting quality by focusing on three perspectives: (1) earnings management, (2) timely loss recognition, and (3) value relevance. Using four years of adoption experience since the mandate was first made effective in Australia for a wide range of accounting-based metrics and market-based information, we find that the mandatory adoption of IFRS has resulted in better accounting quality than previously under Australian generally accepted accounting principles (GAAP). In particular, the findings indicate that the pervasiveness of earnings management by way of smoothing has reduced, while the timeliness of loss recognition has improved post-adoption. Additionally, the value relevance of financial statement information has improved, especially for non-financial firms. This is despite the fact that there is evidence to suggest that financial firms are engaged in managing earnings toward a small positive target after the mandatory adoption of IFRS in Australia.

scholarly journals INTERNATIONAL FINANCIAL REPORTING STANDARDS ADOPTION, INVESTOR PROTECTION, AND FOREIGN PORTFOLIO INVESTMENT: A REVIEW

2021 ◽  
pp. 17-38
Keyword(s):  
Developing Countries ◽  
Financial Reporting ◽  
Investor Protection ◽  
International Financial Reporting Standards ◽  
Regulatory Environment ◽  
Portfolio Investment ◽  
Reporting Standards ◽  
Foreign Portfolio Investment ◽  
Financial Reporting Standards ◽  
Ifrs Adoption

This paper aims to analyze the impacts of International Financial Reporting Standards (IFRS) adoption on foreign portfolio investment (FPI) in relation to investor protection based on existing empirical literature. This study uses a historical approach and focuses on thirty-six relevant articles published in accounting and finance journals. The author provides a theoretical groundwork of the association between IFRS adoption and FPI and summarizes the results. The findings are critically analyzed by employing developed vs. developing country lens. The review study reveals that the effects of IFRS adoption on FPI significantly differ between developed and developing countries. Although the positive impact of IFRS adoption on FPI is documented in existing literature, not all countries (particularly developing countries), firms, and users have benefited or equally benefited from IFRS adoption regarding FPI. In addition, the positive impacts of IFRS adoption on FPI are associated with the country's regulatory environment, such as level of investor protection. The findings of the study suggest that developing countries should ensure a proper regulatory environment to reap the full benefits of IFRS adoption. This review contributes to the existing literature by providing a comparative analysis of IFRS adoption effect on FPI between developed and developing countries while also suggests future research avenues.

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