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Title: Financial Statements Effects of Adopting IFRS: Evidence from Listed Manufacturing Firms in Sri Lanka
Authors: Muthunayake, H.
Kawshalya, P.
Keywords: IFRS Adoption
Value Relevance
Financial Statements Effects
Listed Manufacturing Companies
Sri Lanka
Issue Date: Jun-2021
Publisher: SLIIT Business School
Series/Report no.: Volume 01 - Issue 01;29-57 pp.
Abstract: Accounting Information would be beneficial only if it is relevant to the decisions being made. According to International Accounting Standards Board (IASB), the usefulness of accounting information depends on the fundamental qualitative characteristics of relevance and faithful representation. As a result of harmonization and standardization, International Financial Reporting Standards (IFRS) were adopted in Sri Lanka as a developing country from 1st January 2012. Given the differences that exist between developed and developing countries in the context of the accounting profession and other contextual differences, the impact of IFRS adoption in developing countries remains as an empirical gap in the accounting literature. Therefore, the main purpose of the current study is to examine the impact of IFRS adoption on the accounting information quality, in terms of value relevance and the effect on key financial measures of financial statements in Sri Lanka. Data for the current study are collected from audited annual financial statements and Colombo Stock Exchange (CSE) reports for all the listed manufacturing companies in Sri Lanka, for the period of 10 years from 2008/2009 to 2017/2018. Based on the regression estimates obtained, the study concludes that the value relevance of book values of equity is increased upon IFRS adoption. Further the findings reveal that there are favourable impacts of financial statement measures upon IFRS adoption in listed manufacturing firms in Sri Lanka. These results would be pertinent and significant to both Sri Lankan investors and to accounting standard setting bodies such as the IASB and CA Sri Lanka. Further, the study might also be of value to emerging nations with an investment environment similar to that of Sri Lanka and where IFRS reporting have recently been or will be adopted.
Description: SLIIT Business Review
URI: http://localhost:80/handle/123456789/585
Appears in Collections:Research Papers
SLIIT Business Review

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