Compliance with IFRS 3 and IAS 36 Required Disclosures across 17 European Countries: Company-Level and Country-Level Determinants
Accounting and Business Research, Forthcoming
Posted: 28 Aug 2012 Last revised: 21 Sep 2012
Date Written: August 28, 2012
In this study, we analyse compliance for a large sample of European companies mandatorily applying International Financial Reporting Standards (IFRS). Focusing on disclosures required by IFRS 3 Business Combinations and IAS 36 Impairment of Assets, we find substantial non-compliance. Compliance levels are determined jointly by company- and country-level variables, indicating that accounting traditions and other country-specific factors continue to play a role despite the use of common reporting standards under IFRS. At company level, we identify the importance of goodwill positions, prior experience with IFRS, type of auditor, the existence of audit committees, the issuance of equity shares or bonds in the reporting period or in the subsequent period, ownership structure and the financial services industry as influential factors. At country level, the strength of the enforcement system and the size of the national stock market are associated with compliance. Both factors not only directly influence compliance but also moderate and mediate some company-level factors. Finally, national culture in the form of the strength of national traditions (‘conservation’) also influences compliance, in combination with company-level factors.
Keywords: IFRS, compliance, business combinations, cross-national analysis, goodwill, impairment testing, IFRS 3, IAS 36
JEL Classification: M41, G34, K42
Suggested Citation: Suggested Citation