Impact of IFRS Adoption on Financial Statements of Select Indian Companies

Abstract

The main purpose of this study is to identify the statistically significant differences between the Indian GAAP-based and IFRS-based financial statements of companies in terms of financial statement items through the calculated financial ratios. The analysis is based on the sample of 10 Indian companies that have voluntarily adopted IFRS reporting. Financial statements prepared as per Indian GAAP and IFRS were obtained for a period of 6 years. Financial ratios under the categories, stability, liquidity, profitability and investment valuation were analyzed using the Gray comparability index to analyze the relative effect, the Wilcoxon’s signed ranks test, paired sample t-test, F-test and linear regression for testing the statistical significance. Identifying significant differences between Indian GAAP-based and IFRS-based financial ratios, the study showed that IFRS adoption has led to a statistically significant increase in liquidity, profitability and valuation ratios.

Keywords: International Financial Reporting Standards, financial ratio, accounting standards, IFRS adoption

JEL Classification: G33, M40, M41