Does IFRS Adoption Influence Financial Reporting? An Empirical Study on Financial Institutions

Abstract

This paper primarily examines the effect of the mandatory International Financial Reporting Standards (IFRS) adoption in Canada by Canadian financial institutions. It is a comparative study between the Canadian GAAP financial reporting from 2008 to 2010 and IFRS financial reporting from 2011 to 2012. Since this research is an empirical study, the quantitative research method is applied. The research question for this research study is: Does IFRS adoption influence financial reporting? This research finds that earnings quality has increased due to an increase in value relevance (earnings influence to market price), increase in persistency and predictability in earnings and cash flows, increased influence of earnings to shareholder value, and increase in accruals and timeliness loss of recognition (reduce in income smoothing). However, it also finds that valuation usefulness of earnings to book value per share (accounting valuation) has reduced.

Keywords: IFRS, Financial Institutions, Accounting Quality, Organizational Performance

JEL Classification: M10, M40, M41