Abstract
PurposeThe study aims to investigate whether the adoption of IFRS could ensure ultimate intercompany comparability of operating performance in terms of uniformity in the application of accounting methods and reporting style.Design/methodology/approachUsing content analysis on 125 annual financial statements of 25 companies from five industries listed on the Dhaka Stock Exchange in Bangladesh, this study reports that only the sole adoption and application of principle based IFRS cannot ensure ultimate intercompany comparability of financial reports.FindingsThe findings document that the adoption of IFRS cannot ensure the application of same accounting methods as well as way of presentations which is a precondition of greater comparability of operating performance of competitive firms. The methodological and reporting direction through local regulatory agencies alongside maximum compliance with principle based IFRS can enhance intercompany comparability of financial reports in the same industry.Originality/valueThis study tries to manifest that sole adoption cum implementation of IFRS could not ensure ultimate intercompany comparability of operating performance within the same industry and urges to conduct further research to find out the ways to do so.
Highlights
IntroductionWhy do retail investors ignore accounting information?
Why do retail investors ignore accounting information? Blankespoor et al (2019) concluded that the cost of monitoring and acquiring accounting information demotivates retail investors using accounting disclosures in stock trading decisions
This study aims to investigate to what extent principles-based International Financial Reporting Standards (IFRS) can guarantee intercompany comparability of operating performance ensuring intracompany and intercompany consistency in the application of accounting methods in financial reporting
Summary
Why do retail investors ignore accounting information? Blankespoor et al (2019) concluded that the cost of monitoring and acquiring accounting information demotivates retail investors using accounting disclosures in stock trading decisions. The cost of acquisition and processing of accounting information could avert traders using available accounting disclosures (Bhattacharya, 2001), sometimes they are reluctant to utilize all available information (Malmendier and Shanthikumar, 2007). Investors sometimes depend on nonaccounting information while they doubt higher uncertainty on accounting disclosure (Amir and Lev, 1996). Financial statements having greater comparability enhance value relevance in stock trading and facilitate investors to gather and analyze information at a lower cost (De Franco et al, 2011; Kim et al, 2013). Financial statements having greater comparability enhance value relevance in stock trading and facilitate investors to gather and analyze information at a lower cost (De Franco et al, 2011; Kim et al, 2013). Sunder (2002) exposed that the financial reporting quality of firms depends to a greater extent on two essential variables, namely consistency of accounting methods and comparability of financial
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
