The Impact of an IFRS for SMEs-Based Standard on Financial Reporting Properties and Cost of Debt Financing: Evidence from Swedish Private Firms

Exploring regional variations in the adoption of International Financial Reporting Standard for Small and Medium Sized Entities: A structured review

“…The reasons for this disparity are varied and one of which includes the fact that lenders are comfortable risking their resources on large and well established firms as compared to SMEs. Hellman, et al (2022) finds that the cost of debt for private firms in Sweden significantly decreased as a result of adopting the IFRS for SMEs-based standard, this shows that lenders largely perceive financial statements prepared using the IFRS for SMEs as more reliable, leading to a reduction in borrowing costs for SMEs. Adekanmi, et al (2021) find no link between IFRS for SMEs adoption and sustainability, but urge SMEs in Nigeria to adopt the IFRS for SMEs as it enhances decision usefulness (Mohamed, et al, 2020), accountability, transparency and financial reporting quality.…”

“…This clearly shows that developing countries to some extent are influenced by powerful financial institutions to adopt the IFRS for SMEs (Judge, et al, 2010), and these developing countries may have no choice but to adopt as per the World Bank's recommendations because they need financial support from these financial institutions. Also, long term strategic plans of companies have been found to be a critical element to IFRS for SMEs adoption in Taiwan, wherein SMEs which had plans of being acquired or going public were willing to adopt the IFRS for SMEs (Hsu & Reid, 2023), this is because of the need to send a good signal to the market on the quality of their financial statements, since IFRS for SMEs produced financial statements are perceived as high quality (Hellman, et al, 2022;Budai , et al, 2021;Uddin, et al, 2019;Al-Khafaji, 2018). This shows that the need for capital and resources is a major driving force for adopting accounting standards.…”

SME owners and accountants' perceptions of financial information in small- and medium-sized entities: a Sri Lanka case study

“…Carsberg et al (1985) and Collis and Jarvis (2000) found that small company directors used financial statements to make decisions about directors' pay, bonuses and dividends. Collis and Jarvis (2000), Hellman et al (2022) and Sian and Roberts (2009) further found that financial statements were useful for comparing performance across prior periods. SME users prefer less complex reports that provide information regarding an entity's liquidity, profitability and solvency.…”

“…Additionally, much of the extant literature focuses on SMEs in general and does not distinguish between large SMEs, which may have external shareholders, and the small, and medium-sized SMEs. Evans et al (2005), Sava et al (2013), Barker and Noonan (1996), Demartini (2005) and Hellman et al (2022) assert that differences in users and their needs exist within SMEs, especially between the very small entities and the large SMEs. How the information of financial statements is used by different user groups and how SME users and their financial information needs differ according to the size of SME are important issues to be understood.…”

“…(2005), Sava et al. (2013), Barker and Noonan (1996), Demartini (2005) and Hellman et al. (2022) assert that differences in users and their needs exist within SMEs, especially between the very small entities and the large SMEs.…”