Economic benefits of International Financial Reporting Standards (IFRS) adoption in Romania: Has the cost of equity capital decreased?

2012 ◽  
Vol 6 (1) ◽  
Author(s):  
Stere MIHAI
Keyword(s):  
Financial Reporting ◽  
Economic Benefits ◽  
Equity Capital ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
The Cost

Does IFRS adoption decrease the cost of equity of the global tourism firms?

2017 ◽  
Vol 23 (8) ◽  
pp. 1615-1631
Author(s):  
Zhi-Yuan Feng ◽  
Ying-Chieh Wang ◽  
Hua-Wei Huang
Keyword(s):  
Financial Reporting ◽  
Equity Capital ◽  
Tourism Industry ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Legal Enforcement ◽  
Global Tourism ◽  
The Cost

This article answers the question of whether the adoption of International Financial Reporting Standards (IFRS) reduces the cost of equity capital, with a focus on the tourism industry. We employ a set of global tourism companies and find that mandatory IFRS adoption has a significantly negative relation with the cost of equity capital. However, we find that this relation is varied with different business cultures and geographic areas. Moreover, from interactive analyses of country institutions for the relation between mandatory IFRS adoption and tourism firm’s cost of equity, we show that adopting IFRS complements the deficiencies of various country institutions, such as investor protection, the strength of legal enforcement, and corporate governance.

Does Mandatory Adoption of International Financial Reporting Standards in the European Union Reduce the Cost of Equity Capital?

2010 ◽  
Vol 85 (2) ◽  
pp. 607-636 ◽  
Author(s):  
Siqi Li
Keyword(s):  
Financial Reporting ◽  
Equity Capital ◽  
Reporting Standards ◽  
The European Union ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Financial Reporting Standards ◽  
Legal Enforcement ◽  
Mandatory Adoption ◽  
The Cost

ABSTRACT: This study examines whether the mandatory adoption of International Financial Reporting Standards (IFRS) in the European Union (EU) in 2005 reduces the cost of equity capital. Using a sample of 6,456 firm-year observations of 1,084 EU firms during the 1995 to 2006 period, I find evidence that, on average, the IFRS mandate significantly reduces the cost of equity for mandatory adopters by 47 basis points. I also find that this reduction is present only in countries with strong legal enforcement, and that increased disclosure and enhanced information comparability are two mechanisms behind the cost of equity reduction. Taken together, these findings suggest that while mandatory IFRS adoption significantly lowers firms' cost of equity, the effects depend on the strength of the countries' legal enforcement.

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

2018 ◽  
Vol 26 (1) ◽  
pp. 38-58 ◽  
Author(s):  
Saerona Kim ◽  
Haeyoung Ryu
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Joint Effect ◽  
Equity Capital ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Content Type ◽  
Ifrs Adoption ◽  
The Cost ◽  
The Impact

Purpose The purpose of this paper is to examine the effects of adoption of the mandatory International Financial Reporting Standards (IFRS) on the cost of equity capital in a unique Korean setting. In Korea, individual financial statements were taken as primary financial statements. Before the adoption of IFRS, consolidated financial statements were taken as supplementary financial statements. Design/methodology/approach The authors measure the cost of equity using the average estimates from the implied cost of capital models proposed by Claus and Thomas (2001), Gebhardt et al. (2001), Easton (2004) and Ohlson and Juettner-Nauroth (2005), using it as the primary dependent variable. Mandatory IFRS adoption, the independent variable in this study, is assigned a value of 1 for the post-adoption period and 0 otherwise. Findings Using a sample of listed Korean companies during the period from 2000 to 2013, the authors find evidence of a significant reduction in the cost of equity capital in Korean listed companies after mandatory adoption of the IFRS in 2011, after controlling for a set of market variables. Originality/value This study is one of a growing body of literature on the relations between mandatory IFRS adoption and the cost of equity capital (Easley and O’Hara 2004; Covrig et al. 2007; Lambert et al. 2007; Daske et al. 2008). According to the results of this study, increased financial disclosure and enhanced information comparability, along with changes in legal and institutional enforcement, seem to have had a joint effect on the cost of equity capital, leading to a large decrease in expected equity returns.

scholarly journals Does Mandatory Ifrs Adoption and Macroeconomic Factors Affect Cost of Equity Capital? Empirical Evidence From South African Listed Firms

2019 ◽  
Vol 5 (1) ◽  
pp. 57-70
Author(s):  
Michael Yeboah ◽  
Andrast Akacs
Keyword(s):  
Information Asymmetry ◽  
South African ◽  
Equity Capital ◽  
Reporting Standards ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Data Set ◽  
Managerial Opportunism ◽  
Ifrs Adoption ◽  
The Cost

Purpose: This paper investigates the collaboration of International Financial Reporting Standards (IFRS) adopted and macroeconomic variables interaction with information asymmetry, analysts following and managerial opportunism affecting the cost of equity capital, and also influence investor’s decision taking on companies in South Africa. Design/Approach: A sample of 49 listed Johannesburg mining and manufacturing firms was extracted from archival database of INET BFA/IRESS SA, Morningstar, and Anupedia. A leverage fixed effects panel data set of firms from 2001 to 2014 was examined, which shows that Breusch-Lagrange Multiplier tests and the test of over-identifying restrictions used, form the basis of the content analysis of the most recent IFRS effect after mandatory adoption. We used a hand-collected dataset between 2000 and 2015. Findings: Our findings suggest that a significant association is found between IFRS and its interactions with managerial opportunism and integrity but with a reasonable statistical effect.  However, the IFRS adoption effect on the cost of equity capital of South African firms’ has no significant effect. Practical implications: This study reveals that most firms report more, the credibility of annual financial statements which may not be sufficient because of the qualitative data for an assessment of managerial opportunism, information asymmetry and analysts following.  Of such myopia of company managers, their reputation causes agency problems and as a result, shareholders interest is mainly focused on improving reporting standards Originality: The research considers dual harmonizing facets: first, that the interaction with IFRS adoption and economic factors impact on the cost of equity capital may be so pathetic and obvious; and second, that IFRS moderation impacts on the cost of equity capital in Sub- Saharan African. This finding should be meaningful to managers, analysts, policymakers, and supervisory bodies in nations with similar capital structure decisions and socioeconomic systems.

scholarly journals The impact of international financial reporting standards on cost of capital

2016 ◽  
Vol 14 (1) ◽  
pp. 458-465 ◽  
Author(s):  
Krismiaji ◽  
Adi Prabhata
Keyword(s):  
Financial Reporting ◽  
Cost Of Capital ◽  
Emerging Market ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
The Cost ◽  
The Impact ◽  
Ifrs Implementation

This paper discusses empirical research examining the impact of International Financial Reporting Standards (IFRS) on cost of capital. Using a sample of 1.173 observations of publicly listed companies on the Indonesian Stock Exchange for the fiscal year that ends on December 31, 2006 through 2013, this research finds evidence of positive relationship between IFRS implementation and cost of capital. This means that in post adoption period, the cost of capital increase. This result is inconsistent with investor’s expectation, in which IFRS implementation will reduce information asymmetry which in turn decreases cost of capital. When analysis is decomposed into per sector’s analysis, the results are inconsistent. For some sectors, IFRS adoption does not have impact on the cost of capital, whereas for the others IFRS adoption positively affect the cost of capital. This study provides further evidence on the economic consequence of IFRS implementation on cost of capital using data from emerging market with low-level coercion which is Indonesian Capital Market.

The readability impact of international financial reporting standards

2015 ◽  
Vol 27 (3) ◽  
pp. 282-303 ◽  
Author(s):  
Glenn Richards ◽  
Chris van Staden
Keyword(s):  
Computational Linguistics ◽  
Financial Reporting ◽  
Annual Report ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Financial Disclosures ◽  
Negative Impacts

Purpose – This paper aims to compare the readability of narrative annual report disclosure pre- and post-International Financial Reporting Standards (IFRS) adoption using a computational linguistics programme to determine if annual report disclosures have become more difficult or easier to read following the adoption of IFRS. Design/methodology/approach – This paper empirically measures narrative annual report disclosure readability pre- and post-IFRS adoption using a computational linguistics programme. In this analysis, the authors control for variables that have been identified as relevant to the understanding of financial disclosures, such as size, business volatility, financial leverage and industry. Findings – Significant relationships have been identified between IFRS adoption and reduced readability indicators using readability formulas, and also using other factors such as increased length of annual report disclosures and increased use of tables. Findings suggest that the adoption of IFRS has added complexity and resulted in reduced readability of annual report disclosures. Practical implications – Academic backing to claims of IFRS’s negative implications for financial statements and their ultimate users should encourage action on the part of standard setters and report preparers to address the negative impacts of IFRS adoption. Originality/value – This paper is the first to provide evidence that New Zealand equivalents to IFRS adoption have resulted in not only longer disclosures but also more complicated disclosures.

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