This paper examines the underlying causes for why some countries adopt IFRS for bank reporting, while others do not. Using theory linking the effects of ownership on financial reporting, I first predict that countries with greater state or private concentrated ownership in banks are less likely to choose IFRS for bank reporting. I further predict that countries' banking industries with lower business activity in countries that adopted IFRS (that is lower "network effects") are less likely to choose IFRS for bank reporting. Using hand-collected data from 36 countries--all of which adopt IFRS for non-financial firms, but exhibit variation in the adoption of IFRS for banks--I document strong support of a negative association between adoption of IFRS for bank reporting and the extent of state or private concentrated ownership; I do not find evidence consistent with “network effects"--future work will address potential measurement error in the experimental variable.
Thesis (M.A.) from the year 2018 in the subject Business economics - Accounting and Taxes, grade: 2, Addis Ababa University, course: MBA in Finance, language: English, abstract: The study aims to examine the challenges and prospects of International Financial Reporting Standards (IFRS) adoption in Ethiopian Commercial Banks. To answer the research question and to achieve the objective of the study this paper adopted the mixed research approach. The questionnaire data were analyzed using descriptive statistics and data from interview and document review were interpreted qualitatively. The results show that IFRS adoption in Ethiopian Commercial Banks will result in a number of important benefits to a wide range of stakeholders. The study also found out that with the exception of capital market the other five variables namely need of amending legal and regulatory requirement , volatility of financial position and financial performance , difficulty of obtaining source documents and data ,need of updating the existing accounting software, information system and information technology of the bank, shortage of skilled and competent man power , shortage of strong professional bodies are the key challenges of IFRS adoption in Ethiopian Commercial Banks. Finally the study recommended the relevant commercial code, tax proclamation and NBE directive should be amended by Government organs in consultation with strong professional bodies , establishment of strong professional bodies and capital market, allocation of sufficient financial and other resources by top management , introduction of IFRS in colleges and universities and future adopters should think ahead the required source documents and data as well as ensure the extent of changes needed to update the existing IT infrastructure to satisfy IFRS requirements.
The effects of disclosure level on the cost of equity are a matter of considerable interest and importance to the financial reporting community. Economic theory indeed claims that commitment to increased level of disclosure reduces the cost of capital component that arises from information asymmetries. Accordingly, this paper investigates the effects of IFRS adoption in Europe on the cost of equity for the bank industry. In doing so, it performs an event study, which isolates the effects of accounting changes on the cost of capital from institutional and enforcement mechanisms. This study shows that IFRS adoption has exerted, on average, a positive effect on the cost of capital for the bank industry at least in the very short run. Firms adopting IFRS seem to have experienced a lower cost of equity in the period immediately subsequent the release of financial reporting according to the new accounting standard set.
In the present times International Financial Reporting Standards (IFRS) has gained momentum due to globalization and liberalization. Multinational companies are setting up businesses in emerging markets and entities in emerging economies are accessing global financial markets to fund their expansions and acquisitions internationally. The first-time adoption of IFRS impacts the financial statements of entities due to differences between local Generally Accepted Accounting Principles (GAAP) and IFRS. The impact of IFRS is perceived to be high for banks due to complexities in IAS 39: Recognition and Measurement of Financial Instruments and Hedge Accounting. This paper discusses the conceptual IFRS adoption process for Indian banks for effective implementation of IFRS.
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.
About one-quarter of the world’s central banks apply IFRS with approximately a quarter more looking to IFRS for further guidance where their local standards do not provide enough guidance. Given the varied mandates and types of policy operations undertaken by central banks, there also exists significant variation in practice, style, and the extent of the financial disclosures in both the primary statements and in the note disclosures. By their nature, central banks are unique in their jurisdiction and so do not always have local practices and examples they can follow. Although the major accounting firms have created model disclosures intended for commercial banks, these are often not totally appropriate for a central bank. The application of IFRS across central banks differs based on the mandate of the central bank and the capacity of the accounting profession in the specific jurisdiction. An analysis of international practices, such as those undertaken in preparing these model statements, may help address questions about the structure of the statements themselves as well as the organization of the note disclosures. As a consequence, each central bank following IFRS has largely developed its own disclosures with only limited reference to others. Input from the external auditors has been significant, but some of this has been determined by the approach used by the specific auditor’s style for commercial banks rather than central banks. Auditors do not always fully appreciate the differences between a commercial bank and a central bank, which has a different role and undertakes transactions to meet its policy objectives. This has often led to an over emphasis of items not material in the context of a central bank and insufficient disclosures on operations or accountabilities specific to the functions of the central bank.
This research work examined the impact of International Financial Reporting Standard (IFRS) adoption on Banks performance in Nigeria. The study is based on the appraisal of IFRS compliance and Adoption. Both primary and secondary data were used in this study. The primary data would be sourced via a questionnaire administered in a survey conducted on examining the convergence to IFRS in Nigeria Commercial Banks using Access bank Plc. as a case study while the secondary data collected from Annual Report of Access Banks Plc from 2007 to 2012 as well as journals, textbooks and newspapers. The result of the analysis showed that at there is significant relationship adoption of IFRS and financial reporting of banks in Nigeria and that there is significant relationship between IFRS and banks performance in Nigeria. At degree of freedom 2 and 5% level of significance, the X2 table value is 5.99 while the calculated value is 6.380 and the F statistics computed value show a figure of 23.254 which is significant at 5% level of significant which leads to the rejection of the null hypotheses and the acceptance of the alternate hypotheses which state that there is significant relationship between adoption of international financial reporting standards and financial reporting of banks in Nigeria and that there is significant relationship between international financial reporting standards and banks performance in Nigeria. However, comprehensive implementation of the standard to its totality by firms in the country, and the regulatory authorities should monitor strict compliance.
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.
The purpose of this study is to comparatively analyze the adoption and implementation of International Financial Reporting Standards (IFRS) in the banking sector of Bangladesh both traditional and Islamic banking. The study employs a literature-based method which is a kind of qualitative research approach. Using exploratory analysis the study identifies and compares adoption and application scenarios of IFRS in the traditional and Islamic banking sector as well as identifies major benefits and problems in the adoption and application of IFRS in both sectors. This study concludes that the adoption and application scenarios of IFRS in the banking sector are the satisfactory level and adoption of IFRS offered various benefits but a complete implementation of IFRS by Islamic banks has been proven to genuinely violate the shariah principles. Therefore a separate accounting framework for Islamic products and transactions is required. As the existence of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) is still relevant and essential for the development of Islamic financial institutions. However continuous dialogue and consultation between the International Accounting Standards Board (IASB) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) is needed to harmonize and minimize the difference between the two frameworks. This study expected to benefits the accounting standards-setting bodies and the interested parties as input for them to make a decision whether all standards provided by IFRS are applicable for Islamic Financial Institutions(IFIs) or not.
