Effects Of IFRS Research Articles

Adoption effect of IFRS on corporate social disclosure and gross domestic product: evidence from Nigeria

This study examines compliance with corporate social disclosure requirements of the Nigerian company law and the United Nations, and whether their voluntary declaration by the International Accounting Standards Board detracts from compliance. In addition, the study tests whether IFRS adoption alters the economic growth position of a country. Qualitative, financial and non-financial disclosures, based on core indicators developed by the United Nations Conference on Trade, Aid and Development, and the Nigerian company law were garnered from financial statements prepared before and after IFRS adoption. The study finds that corporate social disclosure on employment creation and labour practices; welfare, health and safety; and environment, improve during the IFRS regime. This improvement is associated with size of the firm, not audit identity, ownership or capital structure. Furthermore, IFRS adoption decreases the gross domestic product of Nigeria.

The adoption of IFRS 8 – no headway made? Evidence from segment reporting practices in Germany

Purpose– The purpose of this paper is to assess the changes in segment reporting practices of German listed firms under the new segment reporting standard IFRS 8.Design/methodology/approach– The authors compare hand-collected segment disclosures of German firms in the first IFRS 8 year with those reported in the last IAS 14R year.Findings– The authors do not find substantial changes in the segment disclosures of German firms under IFRS 8. While the number of reportable segments slightly increased, the amount of information disclosed for each reportable segment decreased. The same applies to geographic areas reported as secondary segments under IAS 14R compared to entity-wide disclosures under IFRS 8. Furthermore, even though more country-specific information was provided, many firms still disclosed only broad geographic areas.Research limitations/implications– Future research should extend the analysis to consider more than one year of data following IFRS 8’s adoption and to examine the impact of the standard on smaller firms. Moreover, investigating economic benefits for investors and other financial statement users following IFRS 8’s adoption could be an avenue for future research.Practical implications– The findings indicate that the International Accounting Standards Board’s (IASB) expectations regarding changes in segment reporting practices under IFRS 8 have only partially been met. The results also reveal some cases of segment reporting practice where compliance is at least questionable. Both findings are of interest to standard-setters and regulators.Originality/value– The paper provides new insights into the effects of IFRS 8’s adoption in Germany and thus contributes to the post-implementation review of IFRS 8 carried out by the IASB in 2012/2013. The study sheds light on the consequences of applying the “management approach” to segment reporting, thereby contributing to the theoretical discussion on the adequacy of the different concepts for disclosing segment information.

IFRS Adoption and the Predictive Power of Earnings Components

This study aims to analyze the predictive power of current accruals and cash flows for future earnings and how IFRS adoption have affected this power, for general firms and for firms with relative higher and lower levels of accruals. Using a sample of 10 countries that have adopted IFRS in 2005, we found that IFRS seems to have significantly increased the predictive power of both accruals and cash flows from operations, while the latter present higher information content for future earnings. When analyzing firms with higher and lower levels of accruals, we found that the predictive power of cash flows is associated with this level and that IFRS appears to have substantially increased its intensity for firms with higher levels of accruals. For firms with the lower levels, the effect of IFRS on the accruals component is the one highlighted, which power have significantly increased after adopting the international standards.

Developments in and Influences on, Financial Reporting in UK

Accounting plays a very important role in society, it impacts on peoples’ wealth and can be a source of power. This does not just apply in the private sector commercial context (consider accounting in other contexts: the public sector, e.g. hospitals and prisons, education, the military; religious institutions; private households, etc.). In addition, accounting information and performance indicators are not objective, absolute measures. Skill and judgment are required in preparing and interpreting accounting information. Thus, this paper will introduce the key developments and influences of the financial reporting in the UK. The research target of this report is the United Kingdom, and the destination is to determine some significant developments and its influences on financial reporting in UK. For this aim, the development of financial reporting from accounting standard and economic policy aspects should be involved, as well as few marked impact on the future of the UK. Relying on the effect of IFRS and Companies Act 2006, financial reporting has a strong transparency and enough reliability of standards to support its constant accounting system. It is foreseen, UK will continue to maintain its existing accounting standards and it will gradually reduce failure economic events in future.

IFRS Adoption and the Environment: Is Africa Closing Her Eyes to Something?

Abstract Purpose This study aims at establishing a linkage between IFRS adoption and environmental pollution in Africa. More so, the role of institution was emphasized as a possible ameliorator of environmental pollution in the face of IFRS adoption. Methodology/approach The empirical model builds on the traditional EKC hypothesis, by including IFRS adoption variable and an interaction term (which captures the multiplicative between IFRS adoption and institutions). Data was gathered for 47 African countries for the period 2001–2013. The SGMM technique was used in the estimation process. Findings The robust estimation reveals that a positive and significant linkage exist between IFRS adoption and environmental pollution. The interactive variable also shows that the effect of IFRS on the environment will reduce when institutions quality (in the form of bureaucratic corruption) is addressed. Originality The linkage between IFRS and the environment has not received empirical attention. This is partly due to the fact that accounting phenomenon is rarely linked to macroeconomic outcomes. However, there is a rising interest in the role of accounting institutions on economic outcomes and this study contributes sufficiently to this budding body of knowledge.

An Empirical Study of the Method Effect in Analysing the Adoption of IFRS

This study investigates the consequences of using different methods when making conclusions about the effect of IFRS. The study’s contribution is related to the suggestion that research design must be considered when analysing the results of prior studies on the adoption of IFRS. In summary, our results demonstrate that the impact of IFRS on accounting quality measured as financial analysts’ information environment depends on the model used. Using the same model as in prior research (the BKLS model) our results confirm earlier studies that IFRS adoption improves the information environment for analysts. However, when using a more sophisticated model no such improvement can be found.

The Effects of IFRS on Net Income and Equity: Evidence from Romanian Listed Companies

IFRS adoption in Europe represents a major milestone towards financial convergence and Romania, as European member state, had in the last few years a positive reaction towards this process. Starting with year 2012, Romania imposed trough its national regulatory body (the Ministry of Finance) the presentation of individual financial statements according to IFRS for 67 Romanian listed companies. The main concern has been to understand the most important differences between national accounting rules and IFRS and how these could affect their reported performance. The goal of the paper is to address this concern by highlighting some empirical evidence of the differences between Romanian accounting regulation and IFRS. These differences are identified in the reconciliation of shareholders’ equity and net income of the Romanian listed companies in order to present the significant impacts of the conversion to IFRS. The conclusion of this study is that for all 67 companies, presented in our study, the application of IFRS had a small effect on net income and shareholders’ equity.

Understanding IFRS Adoption: A Review of Current Debate and Consequences

The adoption of IFRS was intended to improve accounting information quality and ensure greater comparability and transparency of financial reporting around the world. This review has sought to recognize and understand the impacts of IFRS adoption on numerous areas of capitalism. Overall, the implementation of IFRS has been a great success reducing information asymmetry, improving the quality of information for users, enhancing transparency and comparability and positively impacting on capital markets. Generally, the positive effects of IFRS have been associated with firms in strong enforcement regimes that have had incentives to comply. Enforcement of IFRS was a recurring theme throughout the literature reviewed, and consequently, is an area that requires further development. To elaborate, there is a need to develop a mechanism for the enforcement of accounting standards. To this end, there is also a need for collaboration between standard setters and regulatory bodies across the world to maximize the effectiveness of international accounting standards.

IFRS and performance measurement

The performance measurement is essential in any organisation whose existence depends on its efficiency. In this article, we note the effect of IFRS on the evaluation of the performance of companies. For this purpose, we propose a comparative analysis between the Tunisian and international accounting standards and we determine the points of divergence between the two repositories. This analysis is important to help the firms, which are preparing their transition to IFRS.

The Effect of IFRS on Cross-Border Acquisitions

We examine whether the 2005 mandatory adoption of IFRS is followed by an increase in cross-border acquisitions into the adopting countries and whether the association is driven by IFRS per se or by concurrent enforcement changes. Using the exogeneity of a firm’s listing status to identify the effect of IFRS, we document a significant increase in cross-border acquisitions of listed targets from the adopting countries. We find no evidence that the IFRS effect is driven by those countries that apparently bundled the IFRS adoption with enforcement changes. The evidence also suggests that the IFRS effect is likely due to the fact that many different countries use a common reporting system, as opposed to improvement in reporting quality at individual firms. In particular, we find that the increase in investment flow into the IFRS adopting countries comes mainly from other adopting countries and is significantly stronger when the increase in reporting uniformity associated with IFRS is higher. We also find no evidence that firms that voluntarily adopted IFRS prior to the mandatory adoption were more likely to become cross-border acquisition targets.

From SAS to IFRS - Emerging Issues and Implications for Nigeria

Purpose . This paper attempts to re-examine the decision of Nigeria to begin a phased adoption of International financial reporting standards from 2012.Certain emerging issues have made this important. They include researches on the effects of IFRS from the perspective of early adopters, the timeline set for adoption of IFRS by Nigeria, the current state of accounting, legal, regulatory and technological infrastructure in Nigeria and the delay by US, one of the major trading partners of Nigeria to make a firm commitment to the date of adoption. Design/Method/Approach In doing this, we rely extensively on review of theoretical and empirical literature germane to the objective of the paper.

Have IFRS Affected Earnings Management in the European Union?

There has recently been considerable discussion of those features of IFRS that are likely to help improve financial reporting in the European Union. However, certain issues may also have a negative impact on the quality of information. This paper focuses on the effect of IFRS on earnings management. Its main purpose is to examine whether the adoption of IFRS in the European Union has increased or decreased the scope for discretionary accounting practices by comparing discretionary accruals in the periods preceding and immediately after the regulatory change. Another objective is to determine which firms' features and country factors may explain the accounting discretion observed before and after IFRS. We consider a sample of non-financial firms listed on 11 EU stock markets. The results obtained show that earnings management has intensified since the adoption of IFRS in Europe, as discretionary accruals have increased in the period following implementation. The variables explaining accounting discretion are the same before and after IFRS (business size, leverage, investor protection and legal enforcement). These results suggest that variations in earnings management might be due to some room for manipulation under international standards when compared with local standards.

The Effects of IFRS 7 Adoption on Bank Disclosure in Europe

With the endorsement of IFRS 7, which became effective in 2007, the European regulation of bank disclosures has substantially changed. Using a sample of 171 banks from 28 European countries, I analyze the effect of the standard's first-time adoption on disclosure quality. I find that disclosure quality has generally increased both in financial statements and in risk reports but that the focus of disclosures has shifted from market risk exposures to credit risk exposures. The effect of the first-time adoption strongly varies across countries. These variations can be explained by differences in the enforcement and interpretation of IFRS 7 by national banking supervision. Using supervisory practices in Denmark, Italy and the UK as representative examples, I distinguish between an interventionist and a non-interventionist approach. The findings suggest that it is not only the content of IFRS 7 but also the enforcement of the standard that accounts for the increase in disclosure quality. With respect to the enforcement of bank disclosures, the results therefore support recent proposals by the De Laroisière High Level Expert Group to harmonize financial supervision within the EU.

IFRS 4 Insurance Contracts — verbesserte Versicherungsrechnungslegung?

IFRS 4, issued at March 31st, 2004, represents phase I of the IASB project on insurance accounting enabling insurance companies in the European Economic Area to prepare their financial statements according to IAS/IFRS by providing basic rules. The incentives resulting from the „temporary“ declaration are rather complex; IFRS 4 contains only few provisions including temporary choices in accounting treatment. Although phase II of the insurance project dealing with insurance liabilities and other actuarial positions is rather well predictable in many respects the IASB keeps a significant scope of discretion for this phase. IFRS 4 does not represent a self-contained accounting concept; the asset and the debit side of the balance sheet are not coordinated, the former is characterized by a significantly higher volatility. IFRS 4 merely aims at „limited improvements to accounting (…) for insurance contracts“. This moderate objective can be regarded as accomplished. Some of the new mandatory regulations, however, are internationally controversial issues. The effects of IFRS 4 on the price of shares and the cost of capital of insurance companies represent a worthwhile issue for research. Increased transparency, especially due to additional disclosure requirements, and enhanced volatility are opposing each other, and it is rather difficult to assess which effect will predominate under which circumstances.