The use and perceived usefulness of IAS 29 restated financial statements by Zimbabwean investment analysts

Abstract

International Accounting Standard 29 (IAS 29) (Financial Reporting in Hyperinflationary Economies) asserts that, in a hyperinflationary economy, financial statements “are useful only if they are expressed in terms of the measuring unit current at the balance sheet date” (International Accounting Standards Board (IASB), 2005:1259). In the context of the Zimbabwean economy, this study empirically investigates this assertion using a methodological triangulation comprising the protocol analysis (or process tracing) and the questionnaire techniques. Specifically, the investigation assesses the actual use and perceived usefulness of IAS 29 restated financial statements by Zimbabwean investment analysts with respect to the buy-hold-sell decisions. The empirical results indicate that at present, the Zimbabwean investment analysts make little or no use of hyperinflation-adjusted financial statements (HIAFSs) when making ordinary share investment decisions and perceive the information as “not useful”. This perception appears to be the critical reason why the analysts interviewed make little or no use of HIAFSs. Given this paradox, it appears that the need for further empirical research should be regarded as sine qua non if IAS 29 is to remain relevant in Zimbabwe and avoid suffering the same fate as its predecessors, IAS 6 and IAS 15. Further research should be conducted to provide sufficient evidence to enable the IASB and regulatory authorities in Zimbabwe to reassess the relevance of IAS 29.