The Effects of IFRS Adoption on the Unconditional Conservatism of Spanish Listed Companies

Fullana, Olga; Sánchez, Mariano González; Toscano, David

doi:10.2139/ssrn.2926896

Cited by 3 publications

(7 citation statements)

References 40 publications

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“…Finally, our results support previous evidence found in Fullana et al (2019) where, using a similar methodology but measuring unconditional conservatism with BtMadj, they conclude that IFRS adoption has a significant reduction effect on the accounting conservatism of the Spanish listed firms. Our most comparable result with the shown in Fullana et al (2019), which we reproduce in column (4) of Table 6, is in column (3) of the same table. Note that in the evidence shown by Fullana et al (2019), both Size and Debt , which are two variables closely linked to the stock price, are more significant.…”

Section: Model Estimation Resultssupporting

confidence: 90%

“…In both cases, the pre-estimation analysis of our panel data show that GLS with random effects is the correct estimation procedure [9]. However, to take into account the likely endogeneity in the set of variables included in equation (1) and for a better comparability with previous evidence, we follow Fullana et al (2019) and also use the inflation-adjusted variables to perform an estimate with a dynamic estimator for panels with few periods and many individuals where the independent variable is not strictly exogenous: GMM-SYS [10]. We show the GMM-SYS estimation results in column (3).…”

Section: Model Estimation Resultsmentioning

confidence: 99%

“…We show the GMM-SYS estimation results in column (3). Finally, we reproduce for comparative purposes in column (4) the results of Fullana et al (2019) that use adjusted book-to-market (BtMadj) as unconditional conservatism measure and GMM-SYS.…”

Section: Model Estimation Resultsmentioning

confidence: 99%

“…With respect to the empirical analysis of the effect of the mandatory adoption of IFRS on unconditional conservatism of a European stock market listed firms, the most recent work found in the literature is Fullana et al (2019), which offers a detailed review of the previous works in that context. That work follows the market-based methodology of Ahmed and Duellman (2007) that considers the value of the growth options included in the firms’ market value (Roychowdhury and Watts, 2007), as well as possible explanatory factors of unconditional conservatism not related to accounting principles (Nobes, 1998; Ball et al , 2003; Ding et al , 2007).…”

Section: Analysis Of the Previous Literaturementioning

confidence: 99%

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IFRS adoption and unconditional conservatism: an accrual-based analysis

Fullana

González

Toscano

2021

IJAIM

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Purpose In this paper we analyse the effect on unconditional conservatism of the mandatory adoption of International Financial Reporting Standards (IFRS) by the European listed firms in January 2005. Under the hypothesis that accounting regulation influences the accounting conservatism, we use a non-market-based measure of unconditional conservatism – the accrual-based measure proposed by Givoly and Hayn (2000) – to test this effect, controlling for the other determinants of the unconditional conservatism found in the accounting literature. Design/methodology/approach We use a panel data of 10 years and 96 non-financial listed firms in the Spanish stock market in which the differences between local GAAP and IFRS are more important. A pre-estimation analysis of the data reveals that GLS with random effects is the correct estimation procedure. However, to try to deal with the likely endogeneity in the set of variables, the authors perform an estimate with a dynamic estimator for panels with few periods and many individuals where the independent variables are not strictly exogenous. Findings As expected, results show evidence that support a significant reduction on the unconditional conservatism of firms in the sample due to the adoption of IFRS. This evidence is relevant to equity market, debt market and corporate governance users of the financial information, and also for the policymakers who can assess the effects of their mandate. Research limitations/implications Results shown in this paper have all the limitations of system-, country-, sample- and event-specific studies but, along with many others drawn in alternative contexts, may help to correctly understand both the time-evolution and cross-sectional country differences of firms’ unconditional conservatism. Originality/value The study represents the first analysis of the effect of the adoption of IFRS on unconditional conservatism of the European listed companies using a non-market accrual-based measure. Results are not influenced by the dynamics of the stock market and, by comparison, allow us to analyse this influence in results provided by using market-based measures of the unconditional accounting conservatism provided by previous literature.

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Section: Model Estimation Resultssupporting

confidence: 90%

Section: Model Estimation Resultsmentioning

confidence: 99%

Section: Model Estimation Resultsmentioning

confidence: 99%

Section: Analysis Of the Previous Literaturementioning

confidence: 99%

See 2 more Smart Citations

IFRS adoption and unconditional conservatism: an accrual-based analysis

Fullana

González

Toscano

2021

IJAIM

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“…In reviewing the prior studies, we note that a large number of these studies focused on a research aspect that dealt with the effect of IFRS adoption on accounting conservatism. Fullana et al (2017) indicated that the adoption of IFRS did not have any effect on the unconditional accounting conservatism in Spanish listed companies. Arabiat and Khamees (2016) found that the level of decline in conditional conservatism after the applying of (IAS/IFRS) is more noticeable in the companies that report intangible assets and the impairment of goodwill in their financial position.…”

Section: Conservatism In Ifrsmentioning

confidence: 95%

Changes in Accounting Conservatism in Pre- and Post- IFRS Adoption in Jordan

2019

RJFA

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Studying the changes in accounting conservatism in Pre-and Post-IFRS adoption has received great attention by researchers recently. However, there is a lack of previous studies dealing with this subject for sufficient periods and in the banking sector specifically in Jordan. Therefore, the purpose of this study is to examine the relationship between the adoption of IFRS and the accounting conservatism and then measure the degree of change in the level of conservatism for the period 2000-2008 before applying the standards and 2009-2017after applying it. After conducting appropriate statistical analysis and testing hypotheses, the results reveal an overall increase in conditional accounting conservatism during the study period and a higher increase following IFRS adoption. Also, the results provide evidence of significant differences in the level of accounting conservatism for the accounting earnings in pre-and post-adoption of IFRS.

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Measuring the Level of Accounting Conservatism Pre-and Post-IFRS Adoption in Jordan: The Modified Role of the COVID-19 Pandemic

Al-Qudah

2022

Wseas Transactions on Business and Economics

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The purpose of this study is to assess the level of accounting conservatism among Jordanian industrial companies listed on the Amman Stock Exchange. Using the methodology utilized in this analysis, the study compares the succeeding period to the time previous to the required use of International Financial Reporting Standards (IFRS) (Basu, 1997). Furthermore, the study assesses the level of accounting conservatism in the firms studied during the COVID-19 epidemic. A cross-sectional examination of time series data from 2002 to 2021 was used in this study. The study community included 54 Jordanian industrial companies registered on the Amman Stock Exchange. To derive the findings, the study used an analytical-descriptive technique to gather and analyze data. The findings show that the concept of accounting conservatism was used for accounting profits prior to the mandated use of IFRS (2002–2008), although at a low level. The research also found that the companies that were evaluated had implemented the concept of accounting conservatism for accounting profits throughout the time after the compulsory use of IFRS (2009–2019), but to a high degree. This was observed in the second part of the study. The study’s results showed that accounting rules got stricter after the COVID-19 epidemic hit in 2020 and kept going through 2021.

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The Effects of IFRS Adoption on the Unconditional Conservatism of Spanish Listed Companies

Cited by 3 publications

References 40 publications

IFRS adoption and unconditional conservatism: an accrual-based analysis

IFRS adoption and unconditional conservatism: an accrual-based analysis

Changes in Accounting Conservatism in Pre- and Post- IFRS Adoption in Jordan

Measuring the Level of Accounting Conservatism Pre-and Post-IFRS Adoption in Jordan: The Modified Role of the COVID-19 Pandemic

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