The impact of IFRS 16 on airline companies: an exploratory study in the Middle East

Alabood, Enas; Abuaddous, Murad; Bataineh, Hanady

doi:10.1504/ijebr.2019.10021083

Cited by 2 publications

(13 citation statements)

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“…The results show that implementing IFRS affects earnings forecasts and market responses. The result aligns with Alabood et al (2019) that implementing IFRS 16 faces various challenges and changes for various parties.…”

Section: Statistical Resultssupporting

confidence: 76%

“…This research demonstrates a radical change in recognizing how leasing transactions impact firms' financial structures, especially those that formerly relied on operating leases, for example, the aviation industry. IFRS 16's implementation caused the recording of higher asset values and concurrently high debts (Alabood et al, 2019). Interestingly, the literature highlights that standard pre-IFRS 16 leads firms to avoid financing leases on their balance sheets (Imhoff and Thomas, 1988).…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…Post IFRS 16's implementation, leased assets and liabilities have drastically changed these firms' financial ratios. Therefore, IFRS 16's implementation has affected firms' financial statements, especially their liquidity and solvability levels (Alabood et al, 2019). However, Giner and Pardo (2018) showed that IFRS 16's implementation did not fundamentally change the accounting information and impact the stock market.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…Furthermore, it explains that the assets' increases after IFRS 16's implementation are unclear as information conveyances. Second, it contributes to completing the literature gap on the pros and cons of IFRS 16's implementation (Alabood et al, 2019;Giner and Pardo, 2018;Morales-Díaz and Zamora-Ramírez, 2018), especially regarding information blurring. The extant literature explains earnings management volatility due to asset opacity (Mongrut et al, 2021), primarily on the financial statement items affected by the standard's implementation.…”

Section: Introductionmentioning

confidence: 99%

“…This study argues that identifying financial statements’ opaqueness is problematic because it comes from various aspects. IFRS 16 explains that companies with operating leases should recognize their lease contracts in their financial statements instead of off-balance sheet reporting (Alabood et al , 2019). Companies with operating leases will appear more asset-rich while bearing substantial, heavy debt (Alabood et al , 2019).…”

Section: Introductionmentioning

confidence: 99%

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The IFRS 16 implementation in Asia-Pacific countries: enhancing asset pronouncements or opaque information’s conveyance

Utami,

Sumiyana,

Mustakini

et al. 2024

ARJ

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Purpose The purpose of this study is to investigate the implementation of International Financial Reporting Standard (IFRS) 16 in developing countries to enhance asset pronouncements or the quality of opaque accounting information for listed firms’ leasing transactions. Design/methodology/approach This study designed ordinary least square (OLS) regression models to examine the hypotheses in two ordered tests. The first-order test ascertained the association between fundamental accounting information and earnings or stock prices. Then, the second-order test was nested to add the instrument variable to the first-order one. In addition, the researchers selected 17 Asia-Pacific countries. Findings First, this study contributes to the fair value of firms’ asset measurements, and the accounting discipline requires adaptive scalability to produce future potential cash flows. Second, it reduces literature gaps between the pros and cons of the opaqueness of assets. In addition, these research arguments would be the referee for reducing information’s opacity. Finally, this study demonstrates the impact of IFRS 16’s implementation on firms’ conservatism levels and entropy’s information quality, requiring the regulators to accommodate these issues. Originality/value Due to the implementation of IFRS 16, the authors are neutral about the impacted financial statements and political consequences for these Asia-Pacific listed firms and countries. First, we propose the uniqueness of problematic elaboration since implementing IFRS 16 results in a more pronounced or opaque information quality due to vulnerable complexities in the financial statements. Second, this implementation is associated with hierarchical information and conservatism, producing accounting information entropy or negentropy. However, the hierarchy theory suggests various levels of conservatism that could increase or decrease the information’s quality.

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Section: Statistical Resultssupporting

confidence: 76%

Section: Hypotheses Developmentmentioning

confidence: 99%

Section: Hypotheses Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

The IFRS 16 implementation in Asia-Pacific countries: enhancing asset pronouncements or opaque information’s conveyance

Utami,

Sumiyana,

Mustakini

et al. 2024

ARJ

View full text Add to dashboard Cite

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The impacts of IFRS 16 on airlines

Ribeiro,

Ribeiro

2023

AccountingManagementReview

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This study addresses the effects of the adoption of IFRS 16 on the passenger air transport sector. With practical effects for financial years beginning on or after 1 January 2019, IFRS 16 established the standardisation of a single accounting modelfor all leases, whether operating or financial. With this new adoption, IFRS 16 aims to increase the transparency and quality of the information that is presented in the financial statements for the most diverse stakeholders. This study aimed to assess the effects of adopting this new international standard in a specific sector and to identify whether the changes in some of the financial indicators are felt in the same way by all companies, this being the main focus of this study. Based on a sample of 12 airlines from various countries in Europe and South America, the financial indicators were interpreted by analysing the reports and accounts before and after the application of IFRS 16. The main conclusions obtained are: i) the adoption of IFRS 16 led to an increase in assets, liabilities and EBITDA, however in different proportions for each of these items; ii) companies with negative equity and, therefore, with greater risks of bankruptcy or greater information asymmetry, tend to resort more to leasing as a way of financing their assets; iii) the financial autonomy and solvency ratios showed significant variations for companies that resort more to operating leasing.

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The impact of IFRS 16 on airline companies: an exploratory study in the Middle East

Cited by 2 publications

References 0 publications

The IFRS 16 implementation in Asia-Pacific countries: enhancing asset pronouncements or opaque information’s conveyance

The IFRS 16 implementation in Asia-Pacific countries: enhancing asset pronouncements or opaque information’s conveyance

The impacts of IFRS 16 on airlines

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