IFRS Adoption Research Articles

The implementation of IFRS9 in Gulf banks: using the GMM and the difference-in-differences with multiple time periods approaches

Purpose This paper aims to examine the impact of the mandatory adoption of (International Financial Reporting Standards [IFRS] 9) on loan provisions, nonperforming loans (NPL) and impairment loan loss in Gulf banks. This study also investigates potential variations in outcomes compared to prior models and explores the use of the Callaway and Sant’Anna (2021) estimator for difference-in-differences (DiD) with multiple time periods. Design/methodology/approach The research is based on a sample of 53 Gulf banks covering the period from 2012 to 2020. The study analyzes the changes in loan provisions, impairment loss and NPL following the implementation of IFRS 9. It uses statistical analysis and the DiD method to compare the outcomes between the experimental group (treated by IFRS 9) and the control group (not treated). Findings The findings reveal a statistically insignificant increase in loan provisions, impairment loss and NPL after the adoption of IFRS 9. These results align with previous studies and suggest that Gulf banks were proactive in anticipating and mitigating the impact of the new standard. The study also observes a synchronization of provisioning practices across Gulf countries and a certain level of consistency in recognizing loan losses. Practical implications The practical implications of this study suggest that Gulf banks have successfully absorbed the impact of IFRS 9 and have implemented collaborative approaches. Originality/value The study offers some new sight into IFRS9 outcomes in developing countries and opens the door for implementing a novel DiD estimation in future research studies.

IFRS Mandatory Adoption and Earnings Quality in an Emerging Market: The Case of Ecuador

This paper examines changes in earnings quality, including accruals, earnings smoothing, and asymmetric loss recognition schedules, following the mandatory adoption of IFRS in Ecuador. Using 5,436 year-firm observations, we employ a differences-in-differences approach, comparing the effect of IFRS on an initial group of adopters (publicly traded companies) with non-adopters (small and medium-sized enterprises) with essentially the same financial reporting requirements. Our findings indicate a decrease in accrual levels and more timely recognition of losses, with no evidence of changes in earnings smoothing. These results suggest that companies use the increased flexibility of IFRS to meet debt holders' demand for timely loss recognition. The decrease in accruals suggests earnings management for tax purposes. This study contributes to the literature on IFRS and earnings quality by using a more robust research design and providing evidence on the consequences of IFRS adoption in an emerging market dominated by debt capital and family-owned firms.

The Effect of IFRS Adoption, Firm Performance, Audit Quality, Leverage, and Firm Size on Foreign Ownership

IFRS and IAS are internationally accepted accounting standards issued by the IASC/IASB with the aim of uniform accounting standards throughout the world. In diversifying their investments, in addition to understanding the financial statements, investors also need to understand the firm performance and audit quality to increase confidence that the investment will generate profits in the future. The purpose of this research is to determine whether the IFRS adoption, firm performance, and audit quality will significantly affect foreign ownership. The method applied to process research data is a quantitative-descriptive method with unbalanced panel data of eighteen companies registered in the manufacturing sector from 2017-2020. From the results of multiple regression analysis using SPSS, it is known that IFRS adoption has a positive and insignificant effect on foreign ownership. Meanwhile, based on the research results, it is known that the firm performance and audit quality show significant positive results on foreign ownership.

The Effect of IFRS Adoption, Firm Performance, Audit Quality, Leverage, and Firm Size on Foreign Ownership

IFRS and IAS are internationally accepted accounting standards issued by the IASC/IASB with the aim of uniform accounting standards throughout the world. In diversifying their investments, in addition to understanding the financial statements, investors also need to understand the firm performance and audit quality to increase confidence that the investment will generate profits in the future. The purpose of this research is to determine whether the IFRS adoption, firm performance, and audit quality will significantly affect foreign ownership. The method applied to process research data is a quantitative-descriptive method with unbalanced panel data of eighteen companies registered in the manufacturing sector from 2017-2020. From the results of multiple regression analysis using SPSS, it is known that IFRS adoption has a positive and insignificant effect on foreign ownership. Meanwhile, based on the research results, it is known that the firm performance and audit quality show significant positive results on foreign ownership.

The Effect of IFRS Adoption, Firm Performance, Audit Quality, Leverage, and Firm Size on Foreign Ownership

IFRS and IAS are internationally accepted accounting standards issued by the IASC/IASB with the aim of uniform accounting standards throughout the world. In diversifying their investments, in addition to understanding the financial statements, investors also need to understand the firm performance and audit quality to increase confidence that the investment will generate profits in the future. The purpose of this research is to determine whether the IFRS adoption, firm performance, and audit quality will significantly affect foreign ownership. The method applied to process research data is a quantitative-descriptive method with unbalanced panel data of eighteen companies registered in the manufacturing sector from 2017-2020. From the results of multiple regression analysis using SPSS, it is known that IFRS adoption has a positive and insignificant effect on foreign ownership. Meanwhile, based on the research results, it is known that the firm performance and audit quality show significant positive results on foreign ownership.

IFRS Adoption, Corporate Governance, and Information Quality: Evidence From KSA

This research aims to predict the effectiveness of implementing International Financial Reporting Standards (IFRS) in reducing earnings management in Saudi Arabia (KSA). Considering that earnings management is influenced by various factors, we also propose examining the impact of corporate governance strength on enhancing the reliability of accounting information. Empirical results are obtained from a sample of 51 Saudi listed firms observed from 2014 to 2020. Discretionary accruals (DA) are utilized to identify earnings management, estimated using Dechow et al.'s (1995) model. Subsequently, a multivariate regression analysis is conducted to explore the relationship between DA, IFRS adoption, and corporate governance structure. The main findings indicate that the independence of both the boards of directors and the audit committee has a significant negative impact on earnings management in Saudi industrial companies. However, the size of the board, the size of the audit committee, and the frequency of audit committee meetings do not appear to have a significant effect on DA. Therefore, we suggest that certain mandatory measures should be implemented to enhance the effectiveness of corporate governance mechanisms in a developing economy like Saudi Arabia (KSA).

The Changing Role of Accrual Accounting: International Evidence

ABSTRACTUnder the accrual accounting model, the timing role of accruals leads to a negative correlation between accruals and cash flows. Our study investigates the time-series trend of the timing role of accruals and finds a temporal decline in the magnitude of the correlation between accruals and cash flows in our sample of 51 countries over 1991–2019. This decline is primarily caused by increases in loss firms and operation volatility. Several accounting and economic factors, such as the use of accrual accounting, discretionary accruals, matching between revenues and expenses, IFRS adoption, and accounting connectedness, are positively associated with the strength of the accrual-cash flow relation and therefore decelerate the decline of the accrual timing role. Additional analysis suggests that the decline in accrual timing over time is present regardless of a country’s economic growth, legal tradition or institutions, and the extent of the use of accrual accounting.JEL Classifications: M41.

Evidence from the adoption of IFRS 9 and the impact of COVID-19 on lending and regulatory capital on Spanish Banks

This paper provides early descriptive evidence on the effect of the adoption of IFRS 9 and COVID-19 on banks’ lending and regulatory capital. Using a sample of Spanish quoted banks, we find that the implementation of IFRS 9 resulted in an increase in the timeliness of loan loss recognition, and it only had a negative effect on lending for small banks that are timelier in recognizing expected credit losses. Timelier banks, large and small, increased their Tier 1 regulatory capital after the implementation of IFRS 9, although larger banks to a greater extent. Despite the extraordinary economic stimulus measures taken during the COVID-19 shock, there is a reduction in lending for small banks that are timelier in recognizing expected credit losses, and an increase in Tier 1 capital for timelier large banks. These results are not inconsistent with IFRS 9 having some procyclical traits, as it is not possible to anticipate truly unexpected shocks like COVID-19. The fact that IFRS 9 is more forward looking than its predecessor IAS 39, and that the observed effects are mild suggests that IFRS 9 is likely less procyclical than IAS 39.

Corporate Governance and Financial Reporting Quality: The Mediation Role of IFRS

This study investigates how corporate governance affects the financial reporting quality of selected banks in Iraq, focusing on the role of IFRS adoption. The research collected data from 298 questionnaires distributed among diverse private banks, including IS Bank, Vakif Bank, RT Bank, Cihan Bank, Bank of Iraq, and TD Bank. Sobel analysis was used to analyze the mediation between variables. The results demonstrate that IFRS adoption plays a positive mediating role in the relationship between corporate governance and financial reporting quality in private banks. The study highlights the practical benefits of implementing strong corporate governance practices and adopting IFRS, such as improved reporting quality, regulatory compliance, better decision-making, and enhanced reputation. Private banks in Iraq can utilize these findings to enhance their financial performance and reputation by shaping their accounting and governance policies. The research paper provides original insights into the positive impact of corporate governance on financial reporting quality while considering the mediating influence of IFRS adoption, making it a valuable contribution to the research community.

IFRS 9, earnings management and capital management by European banks

PurposeThe purpose of this paper is to compare earnings management (EM) and capital management (CM) by European banks before and after the adoption of IFRS 9. After IFRS 9, banks have more discretion in recognizing loan-loss provisions than before IFRS 9. Hence, after IFRS 9, banks could use EM and CM to a greater extent.Design/methodology/approachThis paper analyzes a sample of European banks and uses regression analysis. First, this paper examines whether EM and CM changed after IFRS 9 was adopted. Next, this study examines whether any changes in EM and CM under IFRS 9 depend on regulatory quality (RQ) in the country where banks are located.FindingsThis paper has three results. First, after IFRS 9, EM increased relative to before IFRS 9. Second, after IFRS 9, CM increased relative to before IFRS 9. Third, this increase in EM was only for banks in countries with low RQ – in countries with high RQ, this study finds no change in EM after IFRS 9. Altogether, these results suggest that, first, EM and CM increased after IFRS 9 and, second, this increase in EM depended on the RQ of a bank’s country.Originality/valueThis paper identifies how the adoption of IFRS 9 affected EM and CM by European banks. The main contribution of this paper is that it examines the impact of the adoption of IFRS 9 on EM and CM by European banks using data from banks’ actual financial statements.

Exploring the macro-market determinants of Chinese FDI in OBOR nations: considering the role of IFRS adoption

The study investigated how accounting quality, corporate governance, and financial market efficiency attract Chinese FDI (CFDI) in the context of IFRS adoption among forty-three BRI economies from 2007–2018. The generalized linear model estimates demonstrated that (i) IFRS adoption negatively affected CFDI; (ii) accounting information quality had an insignificant effect on CFDI; (iii) corporate governance and financial market efficiency had a significant positive role in attracting FDI. Further, the sample was divided into IFRS and non-IFRS BRI Countries. The results were highly robust in economies that practiced IFRS, whereas accounting information quality became significant and positive in economies with no-IFRS practices.

The impact of IFRS adoption on economic growth in transition countries: Evidence from CIS

Abstract International financial reporting standards (IFRS) have become a worldwide common accounting language which most countries have adopted. However, there are no studies obtained based on transition economies in a particular geographic zone. Thus, this study is carried out to observe the influence of IFRS adoptation on the economic growth of 11 CIS countries from 2005 to 2018. To examine the actual effect of the variables, the regression model was divided into two sub-models based on the category of variables. There is a difference between the economic growth in adopted and non-adopted states. The adoption of IFRS showed negative and insignificant relation to GDP per capita. The number of observations after fully adopting IFRS was low, the data on IFRS adoption was challenging, and an advanced econometric model should be selected. The study compared CIS results with Eastern European countries to see a clear pattern and generate an efficient suggestion for policy implementation. The policy implementations related to Uzbeki-stan were also provided.

Changes in accounting regulations toward IFRS and value relevance of accounting information- evidence from Vietnamese listed firms

In the late of 2014, the new Vietnamese accounting regimes for enterprises, which is regarded as being more appropriate for the business practices and being harmonized with IFRS, was issued. The new regulation is a step forward in the roadmap of IFRS adoption in Vietnam with an expectation of improvement in accounting quality. This paper contributes to the discussion of the benefit of IFRS adoption by providing statistical evidence on how the new accounting regimes effect to the value relevance of accounting information (i.e. the relationship between accounting earnings, book values of equity and share price) of Vietnamese listed firms. Based on financial data of 100 Vietnamese listed firm in 10 year (2010-2019), panel regression analysis reveals that the new accounting regimes only enhance value relevance of earnings but do not affect to the relationship between book value of equity and share prices. These results confirm that harmonization of accounting regulation with IFRS have certain effect to accounting quality. This supports for the direction to adopt IFRS in Vietnam but also alerts for more empirical research in the future to understand deeply on the cost and benefit of IFRS in developing countries like Vietnam

Penerapan PSAK 73 atas Profitabilitas, Struktur Modal dan Tangibility pada Perusahaan

This study examines the impact of applying lease accounting before and after implementing PSAK 73 in Indonesia. PSAK 73 is the adoption of IFRS 16, which took effect on January 1, 2020. This study uses a quantitative method approach using secondary data in the form of data and information sourced from the annual financial reports of 52 companies in the infrastructure sector listed on the Indonesia Stock Exchange in 2019 and 2020. Data research was obtained from Indonesia Stock Exchange (IDX). The comparison focus before and after the implementation of PSAK 73 is profitability, capital structure, and tangibility. Testing the hypothesis in this study used a paired sample t-test for paired data. This study concludes that applying PSAK 73 does not result in differences in the profitability, capital structure, and tangibility of infrastructure companies in Indonesia.

Analisis Perbedaan Tingkat Discretionary Accrual Sebelum dan Sesudah Adopsi IFRS

The purpose of this study is to analyze whether there are differences in the level of discretionary accruals before and after the adoption of IFRS. In this study, only one variable is used, namely discretionary accruals. The population in this study are manufacturing companies in the consumer goods industry sector listed on the Indonesia Stock Exchange in the period 2009 to 2018 with a sampling technique using the purposive sampling method. The test method uses the one sample Kolmogorov Smirnov test because the data is normally distributed and processed using IBM SPSS Statistics 26. The results of this study indicate that there are differences in the level of discretionary accruals before and after the adoption of IFRS proved by paired sample t-test.

IFRS Adoptions on Entrepreneurial Intentions: The Nigeria Experience from 2006-2017

This study investigated pre and post-IFRS adoption and entrepreneurial intentions from 2006-2017 using Panel Data from annual financial statement of quoted companies. Data for the study were obtained from secondary sources and analysed using Eview9 statistical package namely: ADF Unit Root Test, Panel Cointegration test; Bayesian Error Correction Model, Panel OLS among others. Data for the work were drawn with purposive sampling techniques from samples of 72 observations Nigeria stock exchange statistical Bulletins. The R-square (Coefficient of Determination) shows an explanation of Pre IFRS (0.280213) and Post IFRS (0.440826) percent of the employed model, i.e. Pre IFRS=28%; Post IFRS 44% and of the variance of the criterion variable is explained by the predictor variable. Which shows how well-fitted the regression is based on the unique theoretical combinations of variables. The Durbin-Watson being a test for auto/serial correlation shows an output of Post IFRS is 1.434594, while Pre IFRS is 1.428219 which signifies the absence of a serial or autocorrelation of the residual (error term) and appears to be within the relevant range. The F-statistics testing the overall hypothesis of the slope coefficient displays a very significant long run relationship based on the statistic output of Post IFRS (6.109727); Pre IFRS (0.004044) at a probability level of Post IFRS (0.000957); Pre IFRS (6.423459) which is less than the critical value of 0.05 (0.00 < 0.05). Therefore, overall we reject null hypothesis and alternate that there is significant (short-run and long-run) relationship between employed variables but in favour with Post IFRS adoption on entrepreneurial intentions. We therefore recommend among others that entrepreneurial intention should focus to boost the long term benefits of all total asset, current asset, non-current asset and profitability index in line with IFRS value relevance reporting accounting techniques.

PENGARUH IMPLEMENTASI IFRS PADA LAPORAN KEUANGAN PERUSAHAAN DI INDONESIA

Indonesia has implemented IFRS as a financial reporting standard following its implementation in multiple countries, resulting in the elimination of certain provisions of accounting standards. This change in concept will have an impact on the development of accounting in Indonesia. The aim of this research is to investigate the influence of IFRS adoption on financial reporting in Indonesia, despite the fact that it has both positive and negative consequences for Indonesian companies. A literature review was conducted using a descriptive qualitative approach, and secondary data sources were utilized. The research findings indicate that businesses in the industry can significantly demonstrate the effects of standard modifications, making it a more efficient standard. The principle-based standard has been created in the form of industry-specific accounting guidelines, which can be utilized as a reference for preparing financial statements for industrial companies.

IFRS Adoptions on Entrepreneurship Entry and Entrepreneurship Exit: The Nigeria Experience From 2006-2017

This study investigated pre and post IFRS adoption on entrepreneurship entry and entrepreneurship exit from 2006-2017 using stacked data from annual financial statement of quoted companies. Data for the study were obtained from secondary sources and analysed using graphical and table presentation on Eview9 statistical package. Data for the work were drawn from samples of 72 observations Nigeria stock exchange statistical Bulletins. The descriptive statistics revealed high benefits of the Post instead of the Pre IFRS adoption which favours entrepreneurship entry and elimination entrepreneurship exist. Therefore, overall the relevance of reporting method using IFRS is credible in short-run and long-run relationship between employed variables favours the Post IFRS adoption on entrepreneurial entry, while discouraging entrepreneurial exit. Thus, there are correlations between the variables to predict the future trend on entrepreneurship entry in the long-run and short-run. In conclusion, it can be notices that with the non-current asset, current asset, total asset performed well, most especially the profit after tax in the mean descriptive statistics on post IFRS adoption. It is therefore recommended that quoted enterprise should put in place a system that would allow the enterprise prto epare its detailed annual financial statements to boost sustainability in the entrepreneurship entry. This will enables the reduction of entrepreneurship existing on enterprise winding up and closure by practicing IFRS adoptions in macro and micro enterprises.

The Impact of International Financial Reporting Standards on Aggressive Accrual: Evidence from Saudi Security Exchange

Purpose: This study investigated the impact of international financial reporting standards on aggressive accrual. The distinguishing feature of this research is the study of the recent adoption of international financial reporting standards in one of the most important economies and emerging markets in the world; the Saudi Security Exchange (Tadawul). Theoretical framework: One important issue that has dominated accounting research for many years is the mandatory IFRS adoption. More specifically, the impact of mandatory IFRS adoption on accounting figures, notably accruals. Most of the studies document mixed effects resulting from IFRS adoption. Design/methodology/methodology: This study focuses on Kingdom of Saudi Arabia's Financial Market due to the recent mandatory adoption of the IFRS by Saudi companies in 2017, using 781 firm-year observations. Our study sample will cover 6 years from 2014-2019, three years before adoption (2014-2015-2016) and three years after adoption (2017-2018-2019). Find: The findings of this study were consistent with previous accounting literature. The study shows a decrease in aggressiveness accruals after adopting international financial reporting standards. The study concluded that the companies listed on the Saudi Stock Exchange (Tadawul), especially after the adoption of international financial reporting standards, do not often provide inflated financial reports with distractions that could lead to customers making irrational decisions. Research, practical and social implications: This study put a spotlight on Aggressive Accrual resulting from mandatory IFRS adoption in emerging markets, such as the Kingdom of Saudi Arabia's Financial Market. Therefore, this study provides an exciting opportunity to advance standards setters’ knowledge of the quality of financial reporting in emerging markets. Originality/value: This is the first study to use Aggressive Accrual around mandatory IFRS adoption. worth noting that apart from the prior literature, no study was devoted to the aggressive accrual in the Kingdom of Saudi Arabia's Financial Market.

IFRS-16 and Information Quality of Listed Non-Financial Firms in Nigeria

Lease accounting was revised in 2016 due to the contentious nature of its reporting in the financial statements under IAS 17- particularly in respect of operating leases. IAS 17 was criticized for impairing the quality of accounting information due to the inappropriate treatment of identified resources in control and financial obligations by lessee firms. IFRS 16 (effective 2019) eliminates the distinction between operating and finance leases requiring right-of-use assets and associated liabilities to be reported on the Statement of Financial Position. In cognizance of its objective of enhancing information quality, the paper assessed the relevance of accounting information reported subject to compliance with IFRS 16 in the context of listed non-financial firms in Nigeria utilizing lease finance. The Ohlson model was modified to regress share price on the book value of equity per share, earnings per share, and the interaction of these variables with IFRS 16 adoption using a data set for 2016-2021. GLS regression results indicate book value per share to have increased relevance with the adoption of IFRS 16, whereas the relevance of earnings per share remains unchanged. The paper concludes that IFRS 16 adoption enhances the information quality of listed non-financial firms in Nigeria. Recommendations are made for firms to optimize accounting processes to achieve or sustain information quality by adopting IFRS 16. The IASB, as a standard-setter, should also prioritize the cost-efficiencies of standards in their implementation, as this could account for a disparity in the perceived accounting information quality of varying-sized firms).