Impact of IFRS: evidence from Spanish listed companies

Abstract

Purpose – In this paper, the authors aim to analyze the impact of International Financial Reporting Standards' (IFRS) mandatory adoption on the financial statements of Spanish listed companies. Design/methodology/approach – The authors estimate a panel data model by generalized least squares' within-between in order to contrast the possible structural breaks in the relations between income statement items and balance sheet items, using data from the 35 largest listed companies. Findings – The results show significant changes on these relations, but with different signs and degrees of intensity depending on the balance sheet item analyzed. Research limitations/implications – The data choice introduces a size bias that could be taken into account in the generalization of the results to other listed companies. Originality/value – This work is developed using a mandatory, local, accounting and panel data framework for first time using Spanish listed companies in order to measure the impact of the IFRS adoption.

Mandatory IFRS adoption, investor protection and earnings management

“…This finding is explained by the importance attached by countries in our sample to the macroeconomics indexes which provide mitigation of opportunistic behavior of managers, which tends to reduce the earnings management. These results are consistent with Dayanandan et al (2016), González et al (2014), Liu et al (2014), Paananen and Lin (2009) Bushman et al (2004) and Bhattacharaya et al (2003). The comparison of the results issued from the estimation of M1 and M2 reveals that mandatory IFRS adoption associated with investor protection decreases the earnings management.…”

“…Noh et al (2017) studied the use of shifting classification to smooth earnings in the Korean market and reveal that at the transition year, firms manage earnings by shifting other revenues and expenses to improve their operating performance. González et al (2014) examine the effect of IFRS adoption on the accounting information (financial statements) of Spanish-listed companies. The findings reveal that, in the post-IFRS period, all items of balance sheet and income statements analyzed were significantly changed.…”

The impact of mandatory IFRS adoption on capital markets: evidence from Korea

“…Because of decreased information asymmetry, from a different perspective, skeptics have argued that the effects of IFRS adoption differ according to the laws, supervisory systems and environment of the capital markets in individual countries (Ball et al , 2003; Burgstahler et al , 2006; Liu, 2011). Prior studies verified that the effects of mandatory IFRS adoption differ because of institutional differences among countries (Fearnley and Gray, 2015; Gonzalez et al , 2014; Li, 2010). There is after all some difficulty applying a uniform standard to different countries (Sunder, 2007).…”

The effect of auditor industry specialization and board independence on the cash flow reporting classification choices under IFRS: evidence from Taiwan

“…Limitations of this study include that it was only conducted in one nation. However, prior literature that has examined IFRS adoption also limited its company sample to a particular country (Chen and Rezaee, 2012;Gonzalez et al, 2014;Kim and Ryu, 2018;8;Isaboke and Chen, 2019). Cross-national research on the issue might be desirable as well, although doing so raises the issue of other national factors affecting the results.…”