Download or read book The Effect of Mandatory Adoption of IFRS on Transparency for Investors written by Crystal Anderson and published by . This book was released on 2018 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the effect of the mandatory adoption of the International Financial Reporting Standards (IFRS) on transparency for investors by measuring the increase in earnings management during the post-adoption period of IFRS. One sign of earnings management is current year earnings being only slightly higher than the previous year's earnings. An increase in earnings management means a decrease in accounting quality and a decrease of transparency for investors. By comparing firms that mandatorily adopted IFRS to similar benchmark firms in terms of strength of legal enforcement, book-to-market ratios, market values and net incomes, I am able to run empirical regressions examining variables of growth, equity issuance, leverage, debt issuance, turnover, size, cash flow, and time period in order to determine the effect of the adoption on IFRS on earnings growth. After looking at 516 firms from 20 countries for the years of 2002-2007, I conclude that IFRS is decreasing financial reporting quality and decreasing transparency for the investing public, and therefore is not accomplishing its goal of bringing efficiency, accountability, and transparency to global financial markets.

Download or read book The introduction of IFRS Consequences for investment decisions written by Simon Falcke and published by GRIN Verlag. This book was released on 2020-07-09 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2019 in the subject Business economics - Investment and Finance, grade: 1,0, Otto Beisheim School of Management Vallendar, language: English, abstract: Starting in 2005, the portion of foreign shareholders in the Dax has risen from 45% to 58% in the last decade. In the same year, the regulation of the European Union from 2002 came into effect which required all listed firms in the European Union to report their consolidated accounts in accordance with the International Financial Reporting Standard (IFRS) from 2005 on instead of each countries’ generally accepted accounting standards (GAAP). This is just one example where the volume of investments increased concurrently with the adoption of IFRS. Therefore, the question arises if the mandatory adoption of IFRS in the EU in 2005 or in other cases significantly affected and continues to affect investment decisions among adopters or third parties. In order to better account for differences between different types of investors and investees, we differentiate between retail investors, institutional investors and corporate finance activities. Moreover, we focus on the consequence of IFRS adoption on equity investment decisions as most research appears to focus on the equity instead of the credit market. Additionally, Lourenco & Branco point out that most research which finds no significant effects of IFRS adoption on investment decisions appears to focus on voluntary adoption before 2005. Thus, this paper mainly focuses on mandatory IFRS adoption. In this context, research suggests that mandatory IFRS adopters experience significant capital markets benefits as well as enhanced foreign institutional ownership and enhanced M&A activity. Ultimately, we observe four overarching drivers behind the aforementioned observations that impact investment decisions across different types of investors and investees.

Download or read book Does IFRS increase transparency and consequently increase investor protection written by Christoph Sindezingue and published by GRIN Verlag. This book was released on 2011 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Studienarbeit aus dem Jahr 2010 im Fachbereich BWL - Investition und Finanzierung, Note: 70/100, Durham University (Durham Business School), Veranstaltung: Research Methods, Sprache: Deutsch, Abstract: Since 2005, the disclosure of consolidated financial statements according to IFRS has been mandatory for all listed companies in the European Union. IFRS supporters claim that a single accounting standard would increase the level of disclosure and hence, increase transparency and therefore investor protection. This paper strives to determine if IFRS increases investor protection through improvements in reporting transparency. Therefore, this paper focuses on the ability of IFRS to decrease earnings management, the main driver of investor protection. The theoretical rationale gives an overview of earnings management, revealing its popularity among management. However, irrespective of the motivation, earnings management reduces the transparency for the investor and thereby reduces investor protection. The review of empirical evidence reveals that voluntary adoption of IFRS leads to a strong decrease in earnings management and an increase in disclosure quality of financial statements. Indeed, the voluntary adoption is biased because the first-time adopters are convinced that a higher transparency could be used to their own advantage. In contrast, the mandatory adoption is not free of ambiguity, but literature tends to conclude that the forced implementation of IFRS leads neither to a reduction of earnings management nor to a higher level of disclosure. Consequently, a mandatory IFRS adoption does not necessarily increase investor protection.

Download or read book The Impact of Mandatory IFRS Adoption on Investment Efficiency written by Ru Gao and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates whether mandatory adoption of International Financial Reporting Standards (IFRS) is followed by a decline in firms' sub-optimal investments. On average, we find that the probability of under-investment in capital expenditure declines for firms from 23 countries requiring mandatory adoption of IFRS relative to firms from countries that do not have such requirements; meanwhile the probability of over-investment remains unchanged. However, this real effect becomes smaller when we control for the concurrent changes to the enforcement of financial reporting along with the introduction of IFRS in some countries, suggesting that the switch in standards is only one of the drivers for the observed benefits. Moreover, we find that the reduction in sub-optimal investments is driven by firms with high reporting incentives to provide transparent financial reports from countries where the existing legal and enforcement systems are strong. We further show that the real effect increases with the predicted changes in accounting comparability. Further, we find that after mandatory IFRS adoption, capital investment becomes more value-relevant, less sensitive to the availability of free cash flows and more responsive to growth opportunities. Our findings provide new insights into the real effects of mandatory IFRS adoption.

Download or read book Impact of IFRS Mandate on Foreign Mutual Fund Ownership Role of Information Transparency and Industry written by 徐崇豪 and published by 索引數位股份有限公司. This book was released on 2018-01-01 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: 本文首先測試了我國接軌與採用國際會計準則(亦稱國際財務報導準則，簡稱IAS或IFRS)對國外基金投資影響。

Download or read book The Future of IFRS written by ICAEW Financial Reporting Faculty and published by . This book was released on 2012 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Transparency Vs Comparability written by Gregory Sabin and published by . This book was released on 2019 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the roles comparability and transparency play in the relation between IFRS adoption and foreign direct investment (FDI). In this study, I disentangle the impact of transparency and comparability through the use of a natural experiment resulting from Mexico's adoption of IFRS in 2012. Greater comparability (adoption of IFRS by both domestic and foreign parties), controlling for transparency (adoption of IFRS by Mexico), increases FDI inflows as reported in column 5 in Table 4. Individually, greater transparency and comparability have been associated with increases in investment activity. However, it is unclear from the existing literature how transparency and comparability interact in the FDI setting. Consistent with prior findings, I find the adoption of IFRS is associated with increases in inbound foreign direct investment. This paper contributes to the literature on IFRS and FDI, specifically with respect to the role of common financial standards in increasing foreign investment activity.

Download or read book Essays on the Economic Consequences of Mandatory IFRS Reporting around the world written by Ulf Brüggemann and published by Springer Science & Business Media. This book was released on 2011-08-31 with total page 162 pages. Available in PDF, EPUB and Kindle. Book excerpt: Ulf Brüggemann discusses and empirically investigates the economic consequences of mandatory switch to IFRS. He provides evidence that cross-border investments by individual investors increased following the introduction of IFRS.

Download or read book Earnings Quality written by Jennifer Francis and published by Now Publishers Inc. This book was released on 2008 with total page 97 pages. Available in PDF, EPUB and Kindle. Book excerpt: This review lays out a research perspective on earnings quality. We provide an overview of alternative definitions and measures of earnings quality and a discussion of research design choices encountered in earnings quality research. Throughout, we focus on a capital markets setting, as opposed, for example, to a contracting or stewardship setting. Our reason for this choice stems from the view that the capital market uses of accounting information are fundamental, in the sense of providing a basis for other uses, such as stewardship. Because resource allocations are ex ante decisions while contracting/stewardship assessments are ex post evaluations of outcomes, evidence on whether, how and to what degree earnings quality influences capital market resource allocation decisions is fundamental to understanding why and how accounting matters to investors and others, including those charged with stewardship responsibilities. Demonstrating a link between earnings quality and, for example, the costs of equity and debt capital implies a basic economic role in capital allocation decisions for accounting information; this role has only recently been documented in the accounting literature. We focus on how the precision of financial information in capturing one or more underlying valuation-relevant constructs affects the assessment and use of that information by capital market participants. We emphasize that the choice of constructs to be measured is typically contextual. Our main focus is on the precision of earnings, which we view as a summary indicator of the overall quality of financial reporting. Our intent in discussing research that evaluates the capital market effects of earnings quality is both to stimulate further research in this area and to encourage research on related topics, including, for example, the role of earnings quality in contracting and stewardship.

Download or read book The world price of earnings opacity written by Uptal Bhattacharya and published by . This book was released on 2002 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Consequences of Voluntary and Mandatory Fair Value Accounting written by Karl A. Muller and published by . This book was released on 2008 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the causes and consequences of European real estate firms' decisions to provide investment property fair values prior to the required disclosure of this information under International Financial Reporting Standards (IFRS). We find evidence that investor demand for fair value information--reflected in more dispersed ownership--and a firm's commitment to transparency increase the likelihood of providing fair values prior to their required provision under International Accounting Standard 40 - Investment Property. We also find that firms not providing these fair values face higher information asymmetry. However, we fail to find that the relatively higher information asymmetry was reduced following mandatory adoption of IFRS. Rather, we find that differences in information asymmetry largely remain. Taken together, this evidence suggests that common adoption of fair value accounting due to the mandatory adoption of IFRS does not necessarily level the informational playing field.

Download or read book The Effect of IFRS Adoption on Accounting Quality and Market Liquidity written by Sidney Leung and published by . This book was released on 2018 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: Previous studies suggest that firm-level reporting incentives play a significant role for heterogeneous effects on the adoption of International Financial Reporting Standards (IFRS) (e.g., Daske et al., 2013; Ball et al., 2003; Leuz et al., 2003; Burgstahler et al., 2006). In this study, we focus on family ownership control, which arguably creates severe agency problems between controlling and minority shareholders as well as weaker incentives for quality financial reporting and transparency. We examine whether the effect of full IFRS adoption on accounting quality and market liquidity is significantly mitigated by family control by comparing accounting quality metrics and market liquidity metrics between family-controlled and non-family-controlled firms listed in Hong Kong for the period before mandatory IFRS adoption and the period after adoption. We show that accounting quality and market liquidity generally improve after full IFRS adoption. However, when we take into consideration of family control, higher accounting quality in the post-IFRS period is only substantiated in the non-family-controlled firms. The accounting quality actually gets worse in the post-IFRS period for family-controlled firms. We also find that improvements in market liquidity after the adoption of IFRS are moderated by family control. The results indicate that the expected benefits of IFRS adoption are realised in non-family-controlled firms, but such desirable outcomes are severely moderated by family ownership control. Given that family control is a common phenomenon in Asia and other emerging economies, our findings are useful for policy makers and investors to better understand the impact of IFRS adoption.

Download or read book The Effect of IFRS Adoption on Earnings Informativeness in Canadian Family Firms written by Adam Bleackley and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In recent years, there has been a global trend of adopting International Financial Reporting Standards (IFRS). In 2011, Canada joined this trend by implementing mandatory IFRS adoption for publicly traded firms. Proponents of IFRS adoption claim that it will benefit investors by improving comparability and transparency of firms. At the same time, research on family firms has seen increasing focus. Because of family ties to the firm, family firms can exhibit different motivations, behaviours and performance than do non-family firms. In this research, I attempt to gain insight on the effects of IFRS adoption for a unique set of firms, namely publicly traded family firms by examining the effect of IFRS adoption on earnings informativeness. Although previous literature examines the economic consequences of IFRS adoption, my study is the first to my knowledge that examines IFRS adoption effects on the unique set of family firms. I run a pooled regression to examine the effects of IFRS adoption on earnings informativeness. I find that IFRS adoption by Canadian family firms is associated with a statistically significant higher level of earnings informativeness. The findings of this research could have implications for standard setters, minority shareholders of family firms, and academic researchers.

Download or read book The Effects of Mandatory IFRS Adoption in the EU written by Brian Singleton-Green and published by . This book was released on 2015 with total page 166 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews the empirical research evidence on the effects of mandatory IFRS adoption in the EU. The research is classified and assessed in relation to the objectives of EU Regulation 1606/2002, which made IFRS mandatory in the EU. The review finds that there is evidence of benefits following IFRS adoption in relation to financial reporting transparency and comparability, the cost of capital, market liquidity, corporate investment efficiency and cross-border capital flows. But the evidence on some of these matters is disputed and it is unclear how far the benefits identified are attributable to the adoption of IFRS or to other concurrent institutional changes, particularly in enforcement. What is clear is that the benefits found are uneven, varying with the institutions and incentives that apply for different companies in different countries. On the possible role of IFRS in the financial crisis in the EU, more research is needed before conclusions can be drawn. The paper also considers the problems of interpreting the research and drawing conclusions from it for policy making purposes.

Download or read book The Impact of Institutional Factors and Culture on IFRS Application written by Mundher Jabbar Dagher Al-Hamood and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Despite the importance of the IFRS in the international context of financial reporting accounting, we know very little concerning the effects of culture on the application of the IFRS. This dissertation empirically examines whether accounting information comparability and earnings transparency resulting from the IFRS adoption varies depending on cultural and institutional factors. Thus, the discussion considers, whether cultural and institutional factors can provide an explanation for differences in accounting information comparability and earnings transparency under the IFRS. Accordingly, the primary purpose of this dissertation is to investigate the role of secrecy, conservatism, pre-adoption divergence between IFRS and national GAAP, and enforcement on accounting information comparability and earnings transparency following the mandatory IFRS adoption.This dissertation therefore contributes to the accounting literature by presenting two essays. The essays address the research questions related to the goals of the IFRS in relation to two aspects: accounting information comparability and earnings transparency. The first study investigates comparability with regard to secrecy and pre-adoption divergence between IFRS and national GAAP. In this study, it is argued that it is easy to predict whether the IFRS adoption enhances the market reaction of competitors around the earnings announcements of a given firm. The results were documented evidence demonstrating that information transfer at earnings announcements increases following the mandatory adoption of IFRS, suggesting, on average, a high level of comparability. However, following the investigations, it would appear that comparability increases for firms domiciled in countries with a low level of secrecy (i.e., where transparency dominates) and, where there is a low divergence of accounting distance. Consequently, these results suggest that all firms do not apply the IFRS uniformly and that they do not automatically comply with IFRS. The second study investigates earnings transparency by examining the earnings-returns relationship with regard to enforcement and conservatism. In this study, the effects of enforcement and conservatism on earnings transparency were examined following the mandatory adoption of IFRS. The results were documented, which demonstrate that earnings transparency increases for firms domiciled in countries characterized by low conservatism only (i.e., where optimism dominates) and, there are benefits with regard to earnings transparency following IFRS adoption for firms domiciled in countries characterized by a high level of enforcement. This also suggests that IFRS is not being applied in the same way in all countries. Taken together, there are significant cross-country differences in IFRS compliance. Accordingly, comparability and transparency differ depending on where a firm is domiciled. If the firms are domiciled in a supportive environment in terms of applying the IFRS (i.e., where there is transparency, optimism, low divergence of accounting distance and strong enforcement), the level of comparability and transparency are increased.

Download or read book Globalization and International Investment written by Fiona Beveridge and published by Taylor & Francis. This book was released on 2017-07-05 with total page 522 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume brings together a broad range of articles on international law and foreign investment which together provide a contemporary overview of the diverse range of issues and perspectives which continue to exercise policy-makers and scholars alike. Central to this collection is the tension between market-oriented reforms on the one hand, raising issues of market access and protection of investors, and corporate social responsibility discourses on the other, raising concerns about environmental protection and respect for human and labour rights. Regional perspectives on these issues reveal differing priorities and approaches.

Download or read book Investment Allocation Decisions Home Bias and the Mandatory IFRS Adoption written by Mattias Hamberg and published by . This book was released on 2015 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the familiarity hypothesis of home bias by studying how foreign ownership of Swedish firms is affected by the mandatory adoption of IFRS. We decompose foreign investors into institutional and non-institutional investors. Foreign investors are further decomposed into EU (IFRS adopting countries) and non-EU residents (non-IFRS adopting countries). We analyse the equity investments of these foreign investor groups in Sweden during the period of 2001-2007. We find that after the mandatory adoption of IFRS, foreign ownership/owners from countries that adopted IFRS and particularly those from the EU increased. These effects are particularly strong in small firms. Foreign institutional investors increased their ownership stake after the mandatory IFRS adoption, whereas foreign non-institutional investments were not affected significantly by the IFRS adoption. In contrast to ownership from non-adopting countries, ownership from the EU increased in firms with both more and less tangible assets. Similarly, foreign ownership from the EU increased in firms with both concentrated ownership and dispersed ownership after the adoption. Because Sweden has already had strict legal enforcement and a low level of earnings management prior to the adoption, our results suggest that increased foreign ownership is due to better abilities to compare firms rather than an improved quality.