International Financial Reporting Standards Adoption Research Articles

Earnings Quality in the IFRS Era: Evidence from Morocco

Purpose: the aim of this study is to determine whether the introduction of International Financial Reporting Standards (IFRS) by Moroccan companies listed on the Casablanca Stock Exchange will contribute to improving the quality of earnings. Methodology: This study spans six years (2015-2020) and a sample of 27 listed Moroccan groups. Furthermore, we divided earnings quality into two main dimensions: on the one hand, earnings management, measured by earnings smoothing and earnings management towards small positive amounts; on the other hand, earnings attribute quality, assessed by accruals quality, persistence and predictability of net income and operating cash flows. Findings: The results of the empirical tests can be divided into two categories: On the one hand, the results of tests of the effect of IFRS on earnings management practices as the first measure of earnings quality show that companies use earnings management in the post-IFRS period compared with the pre-IFRS period. Furthermore, the results of tests of the effect of IFRS on the quality of earnings attributes as a second measure of earnings quality show that the various measures used appear to be of better quality in the pre-IFRS period than in the post-IFRS period. This indicates that the adoption of IFRS in the Moroccan context is contributing to deterioration in the quality of information. Practical implications: The authors demonstrate that the serious and rigorous adoption of IFRS by preparers, as well as training and seminars on the interpretation and application of each standard, are important to accentuate the positive effect of IFRS on the reliability of results. In addition, the findings provide policy-makers and stakeholders in the Moroccan financial market with an insight into the quality of Moroccan standards compared with IFRS in terms of earnings quality. Originality/value: to the best of the authors' knowledge, studies on the effect of IFRS on earnings quality in the Moroccan context are rare, if not non-existent. We therefore focus on this financial center, which mirrors developing countries, in order to highlight the effects of the introduction of IFRS on this type of market.

Do US cross-listings, IFRS adoption and domestic investor protection impact earnings management?

PurposeThis paper investigates the impact of International Financial Reporting Standards (IFRS) adoption and domestic investor protection on the relationship between United States (US) cross-listing and earnings management.Design/methodology/approachThe paper applies ordinary least squares (OLS) regression analyses to a matched sample of cross-listed and non-cross-listed firms from 2000 to 2018, covering 38 countries.FindingsWe find that US cross-listed firms have lower real earnings management. The results also show that real earnings management is lower for US cross-listed firms that adopt IFRS and from high domestic investor protection countries. Our results further show that real earnings management is higher when cross-listed firms use Level 1 American Depository Receipts (ADRs) to cross-list but adopting IFRS and high domestic investor protection help reduce real earnings management. Using the SEC’s Rule 12h-6 as a quasi-natural experiment, we document that post-12h-6 Rule, firms in high domestic investor protection countries experience a reduction in both accruals and real earnings management. However, the result is the opposite in countries with low investor protection.Originality/valueOur findings have implications for regulators and policymakers on the impact of ADR levels and Rule 12h-6 on earnings management.

The Evolution Of International Financial Reporting Standards (IFRS) And Its Impact On Global Business Practices

The International Financial Reporting Standards (IFRS) have undergone significant evolution over the years, shaping the financial reporting on a global scale. The journey of IFRS began with the establishment of the International Accounting Standards Committee (IASC) in 1973, which laid the foundation for international accounting harmonization. Over time, the IASC transformed into the International Accounting Standards Board (IASB), which took on the responsibility of developing and issuing IFRS. The adoption of IFRS has become increasingly widespread, with many countries around the world either adopting the standards outright or converging their national standards with IFRS. One of the primary objectives of IFRS is to enhance the comparability, transparency, and reliability of financial reporting across borders. By providing a common set of accounting principles, IFRS facilitates better communication and understanding among stakeholders, including investors, creditors, regulators and other users of financial information. This standardization promotes efficiency in capital markets and encourages cross-border or cross-nation investment and business activities. IFRS is characterized by its principles-based approach, which emphasizes substance over form and allows for greater flexibility in financial reporting. Unlike rules-based standards, which prescribe specific treatments for various transactions, principles-based standards provide a framework for judgment, allowing preparers to alter their financial statements to reflect the economic reality of their transactions. The impact of IFRS extends beyond financial reporting to areas such as taxation, auditing, and regulatory compliance. While the adoption of IFRS has brought many benefits, it has also presented challenges for companies and regulators alike. The evolution of IFRS has had a profound impact on global business practices, promoting greater transparency, comparability, and efficiency in financial reporting. Through an examination of the evolution of IFRS, this research contributes to a deeper understanding of its profound influence on global business practices

Moderating Effect of IFRS Compliance on the Relationship between Ownership Structure and Financial Reporting Quality

This study investigates the moderating effect of International Financial Reporting Standards (IFRS) on the relationship between corporate governance, specifically ownership structure, and financial reporting quality in listed non-finance firms in Nigeria. Utilizing an ex-post facto research design, the study drew its data from 67 non-finance firms listed on the Nigerian Exchange Group over a ten-year period (2012-2021). The study employs purposive sampling and hierarchical regression analysis to explore the complex connection between IFRS adoption and ownership structures, revealing that IFRS plays a significant role in enhancing the quality of financial reporting. The findings indicate that while ownership concentration may weaken financial reporting quality in the absence of IFRS, the adoption of IFRS significantly moderates this effect, leading to improved transparency and reduced earnings manipulation. This study contributes to the existing literature by providing empirical evidence from a less developed market context, emphasizing the critical interaction between global accounting standards and corporate governance mechanisms. The study concludes that robust enforcement of IFRS compliance, combined with targeted capacity building for financial professionals, is essential to ensure high-quality financial reporting in Nigeria. Key implications include the need for enhanced regulatory oversight and collaboration between regulatory bodies and professional accounting organizations to foster consistent adherence to IFRS, thereby improving the reliability of financial statements and boosting investor confidence.

The Impact of IFRS Adoption on the Comparability, Quality, and Efficiency of Financial Reporting in Public Administration and Emerging Markets

This article investigates the impact of the adoption of International Financial Reporting Standards (IFRS) on the comparability, quality, and efficiency of financial reporting, both in public administration and in emerging markets. Through a quantitative approach, data from various public institutions and emerging market companies that have adopted IFRS in recent years were analyzed. The results indicate a significant improvement in the comparability and quality of financial reports, although accounting efficiency varies depending on the degree of implementation and administrative modernization in the countries. It is concluded that the adoption of IFRS has an overall positive effect, but its total impact depends on the institutional capacity of countries.

Examining the Impact of International Financial Reporting Standards Adoption on Financial Reporting Quality of Multinational Companies

Examining the Impact of International Financial Reporting Standards Adoption on Financial Reporting Quality of Multinational Companies

The role of accounting standards in financial inclusion

Studies have shown that the adoption of high-quality accounting standards such as International Financial Reporting Standards (IFRS) induces diverse economic outcomes by enhancing trust, transparency and market discipline. This paper examines the role of accounting standards in enhancing financial inclusion. Using the World Bank Global Findex database and the dataset on IFRS adoption by Song and Trimble (2022), we find that the adoption of IFRS increases the access and use of financial services. Shedding insight into our main findings, we show evidence of two underlying mechanisms through which the adoption of IFRS may foster financial inclusion: (i) enhancing trust and transparency in the financial system and (ii) reducing perceived corruption. Also, the beneficial effect of IFRS adoption on financial inclusion is evident in both developed and developing countries, suggesting that both developed and developing countries can leverage the adoption of IFRS as a tool for promoting greater financial access and usage. Furthermore, the documented increase in financial inclusion is more pronounced in countries with high regulatory and enforcement mechanisms. Robustness tests including instrumental variable approach confirm our findings. By providing evidence of the positive effect of IFRS adoption on financial inclusion, this paper has practical implications for policymakers and standard setters.

Can IFRS adoption mitigate earnings management in an emerging market?

Research on the impact of the International Financial Reporting Standard (IFRS) mandate on the quality of financial reporting produced mixed findings. Several researchers showed that the IFRS mandate depresses earnings management since it improves comparability, and the principle-based approach offers limited alternatives for managers in reporting. Others have shown that it provides flexibility for managers in institutionally and legally weak countries. We examine whether the IFRS mandate depresses earnings management practices in South Africa. Using a sample of 206 firms listed on the Johannesburg Securities Exchange (JSE) from 2000 to 2010, our findings show that the IFRS mandate significantly reduces earnings management. Our findings contribute to the ongoing discussion about whether high-quality standards effectively mitigate earnings management practices and protect stakeholder rights in developing countries.

Mommy don’t go: The stories of separation anxiety of kindergarten pupils thru the lens of mothers

The evolution of financial reporting standards has been marked by significant shifts from the traditional Generally Accepted Accounting Principles (GAAP) to the globally recognized International Financial Reporting Standards (IFRS). This research explores the historical development, key differences, and implications of transitioning from GAAP to IFRS, along with emerging trends that may shape the future of financial reporting. Through a mixed-methods approach, including qualitative interviews with accounting professionals, auditors, regulatory bodies, and quantitative analysis of financial data from organizations that have undergone this transition, the study aims to provide a comprehensive understanding of the impact of IFRS adoption on financial transparency, comparability, corporate governance, and investor behavior. The findings indicate that IFRS adoption improves financial transparency and comparability, positively influences corporate governance, and enhances investor confidence. Furthermore, the study highlights the growing importance of Integrated Reporting (IR) and Sustainability Reporting, as well as the transformative role of technology in financial reporting. Future research should focus on longitudinal studies to assess the long-term impacts of IFRS adoption and explore the integration of emerging technologies, such as blockchain and artificial intelligence, in financial reporting. These insights will be valuable for policymakers, businesses, and stakeholders in navigating the evolving landscape of financial reporting, ensuring better decision-making and enhanced global financial coherence.

Does International Financial Reporting Standards adoption improve or impede comparability? New evidence from Chinese dual‐class firms

Does International Financial Reporting Standards adoption improve or impede comparability? New evidence from Chinese dual‐class firms

Readiness and Challenges of Companies in Timor-Leste in Adopting International Financial Reporting Standards (IFRS)

Readiness and Challenges of Companies in Timor-Leste in Adopting International Financial Reporting Standards (IFRS)

OPTIMIZATION OF MANAGEMENT DECISIONS IN TAX RELATIONS: NEW TECHNOLOGIES AND STANDARDS IN ACCOUNTING PROCESSES

The article addresses the critical role of accounting information in the context of tax relations, particularly in the dynamic business environment influenced by globalization. It emphasizes the necessity for structured data organization and information flow to enhance managerial decision-making processes. A significant focus is placed on the quality of accounting data, which is foundational for effective tax reporting and compliance. The study reviews existing literature, highlighting the contributions of Ukrainian researchers who stress the importance of relevant and high-quality accounting information for decision-making. The paper aims to explore the evolving approaches to accounting data formation, driven by globalization and the challenges it presents in tax interactions. It discusses the implications of adopting International Financial Reporting Standards (IFRS), which have been developed to ensure transparency, comparability, and high-quality financial reporting across borders. The article notes that while IFRS adoption is mandatory for many entities in Europe, discrepancies in implementation exist among member states, leading to varied disclosure requirements. Furthermore, the introduction of the Standard Audit File for Tax (SAF-T) is examined as a modern solution for enhancing data exchange between businesses and tax authorities. This XML format enables tax officials to access comprehensive accounting information, facilitating tax audits and compliance checks. The integration of SAF-T with IFRS reporting is posited to improve data quality and operational efficiency while addressing the increasing demand for reliable accounting information. In conclusion, the article argues that the implementation of IFRS and SAF-T can significantly enhance financial transparency and comparability, thereby reducing risks and costs associated with investment evaluations in the global market. However, it also acknowledges potential challenges in managing accounting practices and the need for advanced measures to accurately reflect a company's financial status and performance. This comprehensive analysis underscores the importance of high-quality accounting data in navigating the complexities of modern tax relations

What effect does the mandatory adoption of IFRS have on the decision to withdraw an IPO?

ABSTRACT This article fills a gap in accounting disclosure discipline and Initial Public Offerings (IPOs) withdrawal research by examining how mandating IFRS affects IPO withdrawal. This study is the first to examine more than 33,000 worldwide IPOs that were either unsuccessful or successful from 1995 to 2019 in a variety of countries with varying legislative, cultural, and economic environments. We discovered solid evidence that International Financial Reporting Standards (IFRS) standards reduced IPO withdrawal rates. Mandating IFRS before an IPO reduces information asymmetry and reduces the risk of IPO withdrawal for IPO founders. This suggests that mandatory IFRS adoption reduces IPO withdrawals due to many variables. Reduced IPO information asymmetry improves transparency, investor trust, market efficiency, comparability, and liquidity, outweighing any drawbacks. New firms, investors, scholars, and legislators could capitalize on the results of our research.

A panel data analysis of the effect of audit quality on financial statement fraud

PurposeFinancial statement fraud has become a global concern, and auditors are increasingly focused on identifying and investigating it. Auditors may play a crucial role in investigating and reducing financial statement fraud, and this is particularly important in developing countries where fraudulent practices are more prevalent due to the lack of strict regulations and oversight. This study investigates whether enhanced audit quality has an impact on reducing financial statement fraud. The primary aim is to recognize whether a higher level of audit quality relates with a decrease in fraudulent activities in Indonesia, which is one such country that has not yet adopted IFRS.Design/methodology/approachThis study investigates the effect of audit quality, as measured by audit tenure, audit fee, and audit size, on the dependent variable of financial statement fraud, as indicated by Dechow F-value. The sample for this study comprises 951 observations from 2015 to 2020, and the research design utilizes a panel data approach. To test the main hypothesis, OLS, and GMM estimation techniques are employed.FindingsThe analyses reveal a negative relationship between audit tenure and financial statement fraud. This suggests that shorter audit tenure may be associated with an increased risk of financial statement fraud. This heightened risk could stem from auditors having limited time to thoroughly understand the company's operations and internal controls, potentially making it more challenging to detect and prevent fraudulent activities perpetrated by the client. Conversely, a positive relationship is identified between audit fees and financial statement fraud, suggesting that companies paying higher fees may be engaging auditors less adept at detecting fraudulent activities. Furthermore, a negative relationship is observed between Big-5 and financial statement fraud, which may be due to the greater resources, expertise, quality control, scrutiny, reputation, and ethical conduct of Big-5 audit companies.Research limitations/implicationsThis study only focused on listed companies in Indonesia, therefore, caution should be exercised when generalizing the findings to other developing and Muslim countries such as Malaysia. The findings may differ due to the adoption of IFRS in Malaysia. As such, it is important for future studies to include Malaysia as a sample and compare the results with those of Indonesia. This comparison would demonstrate the impact of IFRS adoption on the relationship between audit quality and financial statement fraud and provide insights for policy makers in Indonesia.Practical implicationsThe findings of this study have important implications for developing countries that have been shown to be more susceptible to fraud than developed countries. This study contributes to the existing research on the role of audit quality in reducing financial statement fraud and emphasizes the need for auditors and accountants to take a proactive approach in detecting and investigating financial fraud.Originality/valueThis study is a new study because it investigates the relationship between audit quality and financial statement fraud in Indonesia, a developing Muslim country that has not yet adopted International Financial Reporting Standards (IFRS). The study provides valuable evidence on the unique factors that influence fraud in Indonesia and fills a gap in the literature as previous studies on this topic have largely focused on developed countries. Additionally, the study recommends that policymakers in Indonesia consider implementing IFRS to improve the reliability of financial reporting and strengthen the effectiveness of the auditing process, thus reducing the incidence of fraud.

THE IMPACT OF IFRS ADOPTION ON GLOBAL COMPETITIVENESS

TGlobal adoption of International Financial Reporting Standards (IFRS) represents a significant transformation that enhances the harmonization of accounting practices and the comparability of financial statements. In this study, the relationship between countries’ levels of IFRS adoption and global competitiveness indicators is investigated using Multivariate Analysis of Variance (MANOVA) and discriminant analysis to comprehensively examine this transformation. Data from 86 countries are analyzed, revealing significant differences in several competitiveness indicators based on IFRS adoption levels. The MANOVA results indicate that countries with full or partial IFRS adoption generally exhibit higher institutional quality, infrastructure, and information and communication technology adoption rates. The discriminant analysis classifies countries based on their IFRS adoption levels with an accuracy rate of 77.9%, demonstrating that these adoption levels play a critical role in determining the relevant indicators. The findings suggest that adopting IFRS can enhance economic performance and institutional quality providing valuable insights for policymakers.

THE MODERATING ROLE OF FIRM TRANSPARENCY IN INCREASING THE IMPACT OF IFRS ADOPTION ON THE FINANCIAL STATEMENTS COMPARABILITY: A CASE STUDY ON NORTH AFRICAN COUNTRIES

Objective: This study investigates how firm transparency affects the relationship between adopting International Financial Reporting Standards (IFRS) and the comparability of financial statements in North African countries. Theoretical Framework: The research is grounded in agency theory, suggesting increased transparency reduces information asymmetry between firms and stakeholders. Method: The study employs a quantitative research design, using data from publicly traded companies in North Africa. A multiple PLS-SEM analysis is conducted to examine the interaction between firm transparency and IFRS adoption, and their combined effect on financial statement comparability. Data sources include financial reports and transparency indices over five years. Results and Discussion: The findings indicate that while IFRS adoption alone improves financial statement comparability, the effect is significantly stronger for firms with higher levels of transparency. Transparent firms benefit more from IFRS adoption, as stakeholders find it easier to compare financial statements across different firms. The study highlights that transparency acts as a crucial moderating variable, amplifying the positive impacts of IFRS on comparability. Research Implications: The results underscore the importance of enhancing firm transparency in conjunction with adopting IFRS to maximize financial reporting benefits. Policymakers and regulators in North African countries should focus on promoting transparency to support more effective financial reporting and decision-making. Originality/Value: This research contributes to the limited literature on IFRS adoption in developing regions, particularly in North Africa. It provides new insights into how transparency influences the effectiveness of international accounting standards, offering valuable implications for both researchers and practitioners.

IFRS Adoption and Performance of Stock Markets: A Comparative Analysis of Frontier Stock Markets in Sub‐Saharan Africa

ABSTRACTThe International Financial Reporting Standards (IFRS) is a set of global accounting standards that tries to provide truer and fairer accounting figures by recommending more realistic measurement and recognition criteria, increasing the disclosure of relevant information, and increasing the comparability of financial statements across borders. Most of the literature on IFRS adoption addresses its impact on the value relevance of accounting figures but ignores the wider picture in terms of impact on stock market performance. The few studies that address IFRS adoption and stock market performance focus on advanced economies and lack proper theoretical underpinning. This study addresses the impact of IFRS adoption on stock market performance in Sub‐Saharan Africa. The study applied the autoregressive distributed lag model to test the research hypotheses. The Johannesburg, Nigerian, and Nairobi stock exchanges were selected as the sample markets because they constitute the major frontier markets for foreign investors wishing to penetrate the Sub‐Saharan African market. The sample period was from 1990 to 2020. The results of the study showed that IFRS adoption had a positive and significant impact on market efficiency and size for all the selected countries. IFRS adoption had a positive and significant impact on market liquidity in Kenya only. The study recommends that IFRS adopters should implement stock market policies that encourage the participation of foreign investors following the increase in financial statements comparability brought about by IFRS adoption.

FINANCIAL REPORTING AND PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN LAGOS STATE, NIGERIA: THE CRUCIAL ROLE OF FINANCIAL REPORTING EDUCATION

This study investigates the impact of adopting International Financial Reporting Standards (IFRS), financial reporting quality, and financial reporting education on the performance of listed Small and Medium Enterprises (SMEs) in Lagos State, Nigeria.A primary data were used for this study. The research design was a survey research design, and a well structured questionnaire was employed to gather the data.The findings reveal significant positive impacts. IFRS adoption positively influences SMEs performance in Lagos State (β = 2.027; p < .05). and there exists a significant positive relationship between financial reporting quality and SMEs performance (β = 1.991; p < .05). Additionally, the current level of financial reporting education among SME owners significantly impacts their business performance (β = 2.159; p < .05).The study recommends proactive measures such as promoting IFRS adoption and implementing financial reporting education programs tailored for SME owners.These initiatives are anticipated to enhance transparency, facilitate informed decision-making, and improve overall business performance.

Analysis of the effectiveness of implementing international financial reporting standards in small business

Introduction. The implementation of International Financial Reporting Standards (IFRS) in small businesses is attracting significant attention as a means of enhancing financial transparency and improving comparability in global markets. This paper examines the effectiveness of implementing IFRS in small enterprises, specifically the potential benefits and challenges they face in this regard. The importance of unified financial reporting standards in strengthening investor confidence and facilitating cross-border economic activities, which are gaining increasing importance in this process, is emphasized. The purpose of the paper is to analyze whether the transition of small businesses to IFRS leads to improved quality of financial reporting, increased access to capital, and growth in operational efficiency, while considering the associated costs and challenges. Results. The results indicate that while the implementation of IFRS requires significant initial costs, including training and system upgrades, the long-term benefits generally outweigh these costs. Small businesses that have adopted IFRS produce more accurate and reliable financial reports, which in turn attract potential investors and improve creditworthiness. Standardized reporting practices reduce the risk of financial discrepancies and errors, contributing to increased accountability and transparency. Conclusions. The findings of the study indicate that the effective implementation of IFRS in small enterprises depends on appropriate support and resources, including access to IFRS training and consulting services. Despite existing obstacles, the overall impact on the quality of financial reporting and business growth is positive. The study highlights the need for ongoing support from regulatory bodies to facilitate the transition to IFRS and alleviate the burden on small enterprises. Prospects for further research involve studying the sectoral impact of IFRS implementation on small businesses, as different sectors may experience varying levels of benefits and challenges from IFRS adoption. Long-term studies will provide more information on the enduring impact of the transition to IFRS on the sustainability and growth of small businesses.

Impact of Cost of Capital on European Economic Growth: The Role of IFRS Mandatory Adoption

Since 2005, the International Financial Reporting Standards (IFRS) mandatory adoption in the European Union has played a pivotal role to reduce financing costs which has influenced positively economic growth across member states. Thus, this study examines the effect of Cost of Capital on Economic Growth under IFRS mandatory adoption in 17 European countries between 1994 and 2021 using Pooled Mean Group Autoregressive Distributed Lag (PMG-ARDL) and System Generalized Method of Moments (GMM-system) methods. The findings reveal a positive correlation between the Cost of Capital and Economic Growth under IFRS adoption. Specifically, the model estimates indicate that the Cost of Capital contributes to a 0.58% increase in Economic Growth in the PMG-ARDL framework. Moreover, the GMM-system model underscores the significance of IFRS adoption in reducing the Cost of Capital, leading to a 0.52% increase in Economic Growth. These results provide insights into the benefits of adopting international accounting standards and highlight the importance of institutional and financial factors in shaping the economic impact of adopting accounting standards.