Mandating IFRS in an Unfavorable Environment: The Greek Experience

Posted: 25 Mar 2010

See all articles by Nikolaos I. Karampinis

Nikolaos I. Karampinis

Athens University of Economics and Business - Department of Accounting and Finance

Dimosthenis L. Hevas

Athens University of Economics and Business - Department of Accounting and Finance

Date Written: March 16, 2010

Abstract

This paper assesses the impact of mandatory IFRS adoption in Greece. Our research is motivated by an ongoing debate about the efficacy of enforcing high quality accounting standards in controversial economies with unfavorable economic infrastructures. We perceive Greece as a representative unfavorable economy due to its code-law tradition, bank-orientation, concentrated corporate ownership, weak legal enforcement, poor shareholders’ protection and low regulatory quality. Provided that these circumstances negatively affect managers’ and auditors’ reporting incentives, simply mandating IFRS may prove to be an immaterial change if it is not combined with parallel improvements in other factors that influence the financial reporting system. To address our research question, we explore possible changes in two salient properties of accounting income that are in the forefront of accounting research over the last years: value relevance and conditional conservatism. Our results indicate only minor improvements in both of them after IFRS implementation.

Keywords: IFRS, Reporting Incentives, Value Relevance, Conditional Conservatism, Accounting Quality

JEL Classification: M41, G15

Suggested Citation

Karampinis, Nikolaos I. and Hevas, Dimosthenis (Dimosthenes) L., Mandating IFRS in an Unfavorable Environment: The Greek Experience (March 16, 2010). Available at SSRN: https://ssrn.com/abstract=1572495

Nikolaos I. Karampinis

Athens University of Economics and Business - Department of Accounting and Finance ( email )

76 Patission Street
GR-104 34 Athens
Greece

Dimosthenis (Dimosthenes) L. Hevas (Contact Author)

Athens University of Economics and Business - Department of Accounting and Finance ( email )

76 Patission Street
GR-104 34 Athens
Greece

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