The introduction of IFRS. Consequences for investment decisions

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Publisher : GRIN Verlag
ISBN 13 : 3346203107
Total Pages : 36 pages
Book Rating : 4.3/5 (462 download)

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Book Synopsis The introduction of IFRS. Consequences for investment decisions by : Simon Falcke

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.

The Effect of IFRS on Investment Decisions

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Publisher :
ISBN 13 :
Total Pages : 68 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis The Effect of IFRS on Investment Decisions by : Leonidas C. Doukakis

Download or read book The Effect of IFRS on Investment Decisions written by Leonidas C. Doukakis and published by . This book was released on 2017 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the effect of a change in financial reporting regulation, the adoption of International Financial Reporting Standards (IFRS), on investment decisions in Europe. It further investigates whether capital investment decisions were influenced by the adverse macroeconomic conditions that took place during the crisis period in the Eurozone in years 2008-2010. Moreover, we control for the fact that the impact of the IFRS adoption may differ depending on a) the timing of the adoption i.e. voluntary versus mandatory adopters and b) the legal enforcement and corruption levels. We provide evidence that financial reporting practices of mandatory versus voluntary adopters cause significant differences in (a) the cost of equity capital, (b) the level of capital investments and (c) the return on invested capital. Our evidence suggest that mandatory adopters improved the level of capital investments and the return on invested capital in the post IFRS period and that the cost of equity capital was reduced. These evidence are more pronounced under the strong legal enforcement environment. For the group of voluntary adopters, we verify also a significant reduction in the cost of equity capital in the post IFRS adoption period. Regarding their investment practices, we document higher level of capital investment relative to mandatory adopters in both the pre and post IFRS period and even after controlling for the legal enforcement environment. We provide evidence that during the crisis period the cost of equity capital was increased for both groups. Nevertheless, our results suggest that both groups keep their investment policy unchanged by not reducing the level of capital investments.

Mandatory IFRS Adoption and Institutional Investment Decisions

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Publisher :
ISBN 13 :
Total Pages : 54 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Mandatory IFRS Adoption and Institutional Investment Decisions by : Annita Florou

Download or read book Mandatory IFRS Adoption and Institutional Investment Decisions written by Annita Florou and published by . This book was released on 2012 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine whether the mandatory introduction of International Financial Reporting Standards leads to an increase in institutional investor demand for equities. Using a large ownership database covering all types of institutional investors from around the world, we find that institutional holdings increase for mandatory IFRS adopters. Changes in holdings are concentrated around first-time annual reporting events. Second, we document that the positive IFRS effects on institutional holdings are concentrated among investors whose orientation and styles suggest they are most likely to benefit from higher quality financial statements, including active, value and growth investors. This result is consistent with the holdings changes being associated with the financial reporting regime change. Finally, we show that increased institutional holdings are concentrated in countries where enforcement and reporting incentives are strongest, and where the differences between local GAAP and IFRS are relatively high. Overall, our study helps shed new light on the channels by which IFRS information becomes impounded in market outcomes.

Consequences of Voluntary and Mandatory Fair Value Accounting

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Publisher :
ISBN 13 :
Total Pages : 43 pages
Book Rating : 4.:/5 (271 download)

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Book Synopsis Consequences of Voluntary and Mandatory Fair Value Accounting by : Karl A. Muller

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.

Essays on the Economic Consequences of Mandatory IFRS Reporting around the world

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Publisher : Springer Science & Business Media
ISBN 13 : 3834969524
Total Pages : 162 pages
Book Rating : 4.8/5 (349 download)

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Book Synopsis Essays on the Economic Consequences of Mandatory IFRS Reporting around the world by : Ulf Brüggemann

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.

COMPANY VALUATION UNDER IFRS - 3RD EDITION

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Publisher : Harriman House Limited
ISBN 13 : 0857197770
Total Pages : 286 pages
Book Rating : 4.8/5 (571 download)

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Book Synopsis COMPANY VALUATION UNDER IFRS - 3RD EDITION by : Nick Antill

Download or read book COMPANY VALUATION UNDER IFRS - 3RD EDITION written by Nick Antill and published by Harriman House Limited. This book was released on 2020-02-11 with total page 286 pages. Available in PDF, EPUB and Kindle. Book excerpt: Revised and updated. The influence of International Financial Reporting Standards (IFRS) on accounting across the world is stronger than ever. Most importantly, this stems from the mandatory adoption of IFRSs in many parts of the world, including Europe, Canada, Australia, Brazil and, with some relatively small exceptions, China. Additionally, foreign registrants in the US are also permitted to use IFRS by the SEC. The impact of IFRSs also extends to accounting developments as the IASB and the FASB work closely together to formulate new standards such as those recently issued on leasing and revenue recognition. It is clear that investors, analysts and valuers need to understand financial statements produced under IFRS to feed in to their valuations and broader investment decisions. Written by practitioners for practitioners, the book addresses valuation from the viewpoint of the analyst, the investor and the corporate acquirer. It starts with valuation theory: what is to be discounted and at what discount rate? It explains the connection between standard methodologies based on free cash flow and on return on capital. And it emphasizes that, whichever method is used, accurate interpretation of accounting information is critical to the production of sensible valuations. The authors argue that forecasts of cash flows imply views on profits and balance sheets, and that non-cash items contain useful information about future cash flows - so profits matter. The book addresses the implications for analysis, modelling and valuation of key aspects of IFRS, all updated for recent developments, including: - Pensions - Stock options - Derivatives - Provisions - Leases - Revenue recognition - Foreign currency The text also sets out the key differences between IFRS and US GAAP treatments of these issues, in addition to their implications for analysis. A detailed case study is used to provide a step-by-step valuation of an industrial company using both free cash flow and economic profit methodologies. The authors then address a range of common valuation problems, including cyclical or immature companies, as well as the specialist accounting and modelling knowledge required for regulated utilities, resource extraction companies, banks, insurance companies, real estate companies and technology companies. Accounting for mergers and disposals is first explained and then illustrated with a detailed potential acquisition.

Globalization and International Investment

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Publisher : Taylor & Francis
ISBN 13 : 1351933051
Total Pages : 522 pages
Book Rating : 4.3/5 (519 download)

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Book Synopsis Globalization and International Investment by : Fiona Beveridge

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.

IFRS in a Global World

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Publisher : Springer
ISBN 13 : 3319282255
Total Pages : 477 pages
Book Rating : 4.3/5 (192 download)

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Book Synopsis IFRS in a Global World by : Didier Bensadon

Download or read book IFRS in a Global World written by Didier Bensadon and published by Springer. This book was released on 2016-05-13 with total page 477 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book, dedicated to Prof. Jacques Richard, is about the economic, political, social and even environmental consequences of setting accounting standards, with emphasis on those that are alleged to be precipitated by the adoption and implementation of IFRS. The authors offer their reasoned critiques of the effectiveness of IFRS in promoting genuine global comparability of financial reporting. The editors of this collection have invited authors from 17 countries, so that a great variety of accounting, auditing and regulatory cultures, and educational perspectives, is amply on display in their essays.

The Impact of Mandatory IFRS Adoption on Investment Efficiency

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Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis The Impact of Mandatory IFRS Adoption on Investment Efficiency by : Ru Gao

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.

Effects of International Financial Reporting Standard (IFRS) on Value Relevance of Accounting Information

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Publisher :
ISBN 13 :
Total Pages : 57 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Effects of International Financial Reporting Standard (IFRS) on Value Relevance of Accounting Information by : Osamwonyi Ohonba

Download or read book Effects of International Financial Reporting Standard (IFRS) on Value Relevance of Accounting Information written by Osamwonyi Ohonba and published by . This book was released on 2019 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: The broad objective of this research was to empirically examine the effect of IFRS on value relevance of accounting information. This study employs a longitudinal panel research design. The population of this study covers all quoted banks listed on the Nigerian Stock Exchange. As at the study period, there were only 15 quoted banks on the Nigerian Stock Exchange and this also forms the sample for the study. Secondary data was been used for this study. The data was retrieved from corporate annual reports of the sampled banks for 2010-2017 financial years. The researcher utilizes only corporate annual reports because they are readily available, accessible and also provides a greater potential for comparability of results. More so, they are produced annually and kept in public sphere. The Ordinary least square regression (OLS) was used for the data analysis. The study findings revealed that while IFRS adoption has a statistically significant influence on Earnings per share and Dividend per share value relevance; it has no statistically significant influence on Book value per share value relevance. The study recommends that investors and indeed users of accounting information should still be confident in relying on accounting information prepared by corporate entities in making investment decisions. The study recommends that there is need for companies to comply fully with all IFRS standards in the preparation of financial reports since IFRS adoption was found to have positive effects on value relevance.

Adoption of IFRS in the Netherlands. Impact on value relevance

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Publisher : GRIN Verlag
ISBN 13 : 3656605963
Total Pages : 52 pages
Book Rating : 4.6/5 (566 download)

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Book Synopsis Adoption of IFRS in the Netherlands. Impact on value relevance by : Alfred Mully

Download or read book Adoption of IFRS in the Netherlands. Impact on value relevance written by Alfred Mully and published by GRIN Verlag. This book was released on 2014-03-03 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: Masterarbeit aus dem Jahr 2007 im Fachbereich BWL - Bank, Börse, Versicherung, , Sprache: Deutsch, Abstract: Listed Dutch firms are required by law to prepare their financial statements in accordance with the International financial Statements (IFRS) since 2005. Before 2005, listed Dutch firms prepared their financial statements using Dutch law, Title 9 of book two of the Dutch Civil Code. It is interesting to investigate the effect of the implementation of IFRS. Is the quality of the financial statements improved by the implementation of IFRS for the users of the financial statements, such as investors, suppliers and banks? This question can be answered in many ways, looking at different characteristics of the accounting information, for example the comparability, the relevance, the reliability and the understandability. In this thesis the relevance will be studied. Information has the quality of relevance when it influences the economic decisions of users by helping them evaluate past, present or future events or conforming, or correcting, their past evaluations. (IFRS Handbook, 2007, p. 40) In order to be relevant the accounting information must reflect the information needs of the users in valuing a company. In order to determine the market price of a company, investors need accounting information that reflects the share price of a company. The research done studying the relevance of accounting information for valuating companies is called value-relevance research. The implementation of IFRS had consequences for the value-relevance of the accounting information. Whether the value-relevance had improved by the adoption of IFRS is dependent on the differences between the former accounting system and IFRS. The impact on value relevance in the Netherlands has not been studied yet. The impact on value-relevance in other countries has been studied however, for example in the United Kingdom (Harris and Muller, 1999), Germany (Hung and Subramanyam, 2007) and Spain Callao et al. (2007). These studies can give a powerful insight in how the difference in value-relevance of two accounting systems can be studied.

IFRS Framework/ EU Directives and Their Effect on Investment Decisions

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Publisher :
ISBN 13 :
Total Pages : 27 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis IFRS Framework/ EU Directives and Their Effect on Investment Decisions by : Maria Dimitriou

Download or read book IFRS Framework/ EU Directives and Their Effect on Investment Decisions written by Maria Dimitriou and published by . This book was released on 2020 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: IFRS framework and EU directives affect capital markets. In this paper, the impact of the development of IFRS is investigated, considering the current situation in the years of the global financial crisis and recognizing the importance of small and medium-sized entities. It has recently been known that specific standards for SMEs have been published; IFRS for SMEs in 2009. In particular, it is asked if this will be following the small and medium-sized entities in Greece. Indeed, in Greece, there is an effort to issue the New Greek Standards close to IFRS for all kinds of companies regardless of their size. The paper uses facts and figures about Food and Drink Sector, focusing on listed companies in ASE. The objective is to explore whether, how and why somebody should invest in this sector in ASE. The paper examines these investment opportunities in relation to the IFRS adoption and EU directives in Greece.

IFRS Adoption and Financial Reporting Quality

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Publisher :
ISBN 13 :
Total Pages : 14 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis IFRS Adoption and Financial Reporting Quality by : Habeeb Mohamed Nijam

Download or read book IFRS Adoption and Financial Reporting Quality written by Habeeb Mohamed Nijam and published by . This book was released on 2016 with total page 14 pages. Available in PDF, EPUB and Kindle. Book excerpt: Conventional and commonly held wisdom with respect to the adoption of International Financial Reporting Standards (IFRS) is that they lead to improved financial reporting quality and comparability and thereby favorable economic consequences. There are however contradicting evidences disproving this conventional wisdom or rejecting its gross generalization over the entire jurisdictions harmonizing on IFRS. Driven by this fact, quests for knowledge about the dynamics and contexts that lead to differential effects of IFRS get momentum. In an attempt to explore the insight into the effects of international accounting harmonization by way of IFRS adoption, this paper reviews selected literatures on consequences of IFRS adoption. This review discusses some empirical evidences that have been reported in various countries that include Europe, USA, United Kingdom, Germany, Spain, Norway, Greece, Poland, Belgian, France, Italy, Turkey, United Arab Emirates (UAE), Kuwait, Jordan, China, Malaysia, Australia, Hong Kong, New Zealand, Kenya and Nigeria. Our review focuses on the aspects of value relevance, disclosure quality, cost of capital, earning management and financial statement impact due to the IFRS adoption. This review reveals that economic consequences of IFRS adoption significantly differ across jurisdictions though being its impact reported to be positive in majority of cases. There are also notable number of studies that report indifferent and or negative effects of IFRS adoption. When IFRS studies report mixed evidence with respect to value relevance of book value of equity and earing, book value of equity supersedes the earning parameters. IFRS are found to supersede many other domestic financial reporting standards in terms of volume and quality of disclosures in financial statements. This review also obtains that IFRS' impact on the reduction of cost of capital depends on financial reporting incentives, law enforcement, types of legal systems and various other country and capital market specific characteristics. Further, though there are some evidences to the contrary, the quality of earnings reported under IFRS has been established to be superior to that under other local standards.

Accounting Choices Under IFRS and Their Effect on Over-investment in Capital Expenditures

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Publisher :
ISBN 13 :
Total Pages : 59 pages
Book Rating : 4.:/5 (86 download)

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Book Synopsis Accounting Choices Under IFRS and Their Effect on Over-investment in Capital Expenditures by : Mohamad Mazboudi

Download or read book Accounting Choices Under IFRS and Their Effect on Over-investment in Capital Expenditures written by Mohamad Mazboudi and published by . This book was released on 2012 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: IFRS allows firms to choose between fair-value accounting and historical cost accounting with impairment testing for property, plant and equipment (PPE). This study examines the effect of firms' accounting choices for this group of non-financial assets on over-investment after IFRS mandatory adoption in the European Union (EU). My results indicate that over-investment in PPE (or capital expenditures) is lower following IFRS adoption among EU firms that used historical cost accounting with impairment testing in the post-IFRS period, consistent with EU firms having more timely loss recognition for PPE under IFRS strict impairment rules. In my analysis of United Kingdom (UK) firms, I find that most UK firms elected to use historical cost accounting with impairment testing for PPE after IFRS mandatory adoption. I also find that UK firms that previously used fair-value accounting under UK GAAP and then switched to historical cost accounting with impairment testing under IFRS exhibit greater reductions in over-investment relative to other EU firms that used historical cost accounting with impairment testing prior to IFRS adoption. Additional analysis suggests that the reductions in over-investment after IFRS mandatory adoption are greater as the severity of agency conflicts increases, consistent with outside shareholders demanding timely loss recognition as a means of addressing agency conflicts with managers.

International Accounting and Multinational Enterprises

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Publisher : John Wiley & Sons
ISBN 13 : 0471652695
Total Pages : 520 pages
Book Rating : 4.4/5 (716 download)

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Book Synopsis International Accounting and Multinational Enterprises by : Lee H. Radebaugh

Download or read book International Accounting and Multinational Enterprises written by Lee H. Radebaugh and published by John Wiley & Sons. This book was released on 2006-01-04 with total page 520 pages. Available in PDF, EPUB and Kindle. Book excerpt: This text presents international accounting within the context of managing multinational enterprises, focusing on business strategies and how accounting applies to these strategies. This unique approach gives students the opportunity to learn about international accounting from a perspective similar to what they will experience in the business world. The book explains the key factors that influence accounting standards and practices in different countires, and how those factors impact the convergence of standards worldwide. Particular emphasis is given to culture and its unique contribution to accounting standards and practices worldwide. The book focuses on the needs of users of financial and accounting information across borders with the aim of enhancing their understanding of how to use information and make more informed decisions in an increasingly complex and dynamic international business environment.

IAS/ IFRS

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Publisher : FrancoAngeli
ISBN 13 : 9788846480880
Total Pages : 132 pages
Book Rating : 4.4/5 (88 download)

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Book Synopsis IAS/ IFRS by : Vera Palea

Download or read book IAS/ IFRS written by Vera Palea and published by FrancoAngeli. This book was released on 2006 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Potential Benefits And Limitation Of Adopting The IFRS For Germany

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Publisher : GRIN Verlag
ISBN 13 : 3668138052
Total Pages : 25 pages
Book Rating : 4.6/5 (681 download)

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Book Synopsis Potential Benefits And Limitation Of Adopting The IFRS For Germany by : Marvin Müller

Download or read book Potential Benefits And Limitation Of Adopting The IFRS For Germany written by Marvin Müller and published by GRIN Verlag. This book was released on 2016-02-02 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2016 in the subject Business economics - Accounting and Taxes, grade: 81%, University of South Wales, language: English, abstract: The report aims to analyse the opportunities, negative impacts and limitations of adopting IFRS for German SMEs. At first, a classification of SMEs in Germany is given and their current situation is demonstrated. The next passage critically analyses the impact of an introduction of IFRS for SMEs in Germany. The analysis includes investigating if the effect varies in different crucial business factors of SMEs as well as their company type. At last, the results are summarised and recommendations are given.