Global Accounting Standards, Financial Statement Comparability, and the Cost of Capital

Huang, Yong; Yan, Chao

doi:10.2139/ssrn.3500694

Cited by 2 publications

(2 citation statements)

References 43 publications

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“…et al (2013, p. 393) state that "If IFRS is higher-quality standards and provide better information, then IFRS adoption has the potential to generate the above benefits". It can be Financial instruments disclosures said that having high-quality accounting standards, such as IFRS, would reduce the COC for companies (Huang and Yan, 2020;Yim, 2020). In fact, reviewing IFRS literature and its application is a theme that still requires more investigation and development (Houqe, 2018).…”

Section: Literature Review 21 International Financial Reporting Standard and Cost Of Equity Capitalmentioning

confidence: 99%

The impact of financial instruments disclosures on the cost of equity capital

Hussainey

Albitar

2021

IJAIM

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Purpose This study aims to investigate the impact of financial instrument disclosures under the International Financial Reporting Standard (IFRS) 7 on the cost of equity capital (COEC). Design/methodology/approach The sample consists of 56 banks listed in the Gulf cooperation council (GCC) stock markets over 7 years from 2011 to 2017. A self-constructed index is used to measure the compliance level in addition to quantitative methods and panel data regression adopted to test the research hypotheses. Findings The authors find that the compliance level with IFRS 7 does not improve from 2011 until 2017 in the GCC banks. The authors also find that compliance with IFRS 7 disclosures reduces the COEC. Originality/value The authors also provide new empirical evidence that the level of mandatory financial instruments disclosures under IFRS 7 reduces the COEC. The findings offer policy implications. It shows that compliance with IFRS 7 disclosure requirements leads to desirable economic consequences.

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Section: Literature Review 21 International Financial Reporting Standard and Cost Of Equity Capitalmentioning

confidence: 99%

The impact of financial instruments disclosures on the cost of equity capital

Hussainey

Albitar

2021

IJAIM

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“…Researchers also point out the importance of narrative reporting and argue that although Directive 2013/34/EU regulates the contents of management reports, a harmonised practice of narrative reporting at EU level is lacking, due to the high degree of flexibility provided by the Directive 2013/34/EU [9]. Other authors monitored how financial statement comparability affects the cost of capital and investor welfare and proved that the cost of capital decreases with comparability if and only if the quality of accounting standards is sufficiently high [10]. The aim of this paper is to compare selected aspects of financial reporting in the Czech Republic, Slovakia, Hungary and Poland, point out differences and demonstrate the influence of these differences on selected ratios of financial analysis.…”

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confidence: 99%

Comparison of Financial Reporting in the Visegrad Four Countries in a Global Environment

Lőrinczová

2021

SHS Web of Conf.

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Research background: The Visegrad Four (V4) countries are the Czech Republic, Slovakia, Hungary and Poland. As members of EU they had to incorporate into their national legal accounting framework the European Directives related to annual accounts, valid at the time, where various choices were possible to adopt. Some principles of the international financial reporting standards IFRS also affected the national accounting frameworks more or less, depending on the country. These various influences may affect the external user´s ability to read the published financial statements and compare them. Purpose of the article: The aim of this paper is to compare the relevant national legal framework of accounting in selected areas and the content of financial statements required in the V4 countries and to point out the influence of the chosen presentation of some financial information on selected indicators of financial analysis. Methods: Methods of description, analysis, comparison and synthesis are used to achieve the set aims of the paper. The financial analysis is demonstrated on an illustrative example of reported financial information which is based on the different national accounting legislation. Findings & Value added: The comparison showed some similarities and differences. The main differences amongst the V4 countries are related to the reporting of leased assets and the variation of own production and work-in-progress. Czech Republic does not report the leased assets in the balance sheet of the user of the asset but in the owner´s while the Slovak republic, Hungary and Poland report the asset in the user´s balance sheet which is in accordance with the international accounting standards IFRS (in case of Poland it depends on the lease contract). The Czech Republic reports the changes in own production and capitalization of own work as part of expenses which is in line with IFRS. The Slovak Republic, Hungary and Poland report these items as part of revenues which is in line with the EU Directive but in contrast with IFRS. Also, the Slovak republic and Poland have definitions of the elements of financial statements in their accounting legislation while the Czech Republic and Hungary do not have these definitions. These differences influence the results of ROA, ROE and cost efficiency when comparing the same situation in these countries as it is evidenced on the illustrative example in the paper.

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Global Accounting Standards, Financial Statement Comparability, and the Cost of Capital

Cited by 2 publications

References 43 publications

The impact of financial instruments disclosures on the cost of equity capital

The impact of financial instruments disclosures on the cost of equity capital

Comparison of Financial Reporting in the Visegrad Four Countries in a Global Environment

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