Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The impact of IFRS on net income and equity: evidence from Italian listed companies

The impact of IFRS on net income and equity: evidence from Italian listed companies Purpose – The mandatory conversion to IFRS (International Financial Reporting Standards) has represented much more than a change in accounting rules. Firms’ main concerns have been to understand the extent to which accounting differences between national GAAP and IFRS could affect their reported performance. The purpose of this paper is to address this concern by providing empirical evidence of the nature and the size of the differences between Italian accounting principles and IFRS. Design/methodology/approach – The total and individual differences between Italian GAAP and IFRS are identified and quantified in the reconciliations of net income and equity of companies listed on Borsa Italiana . The focus is to show the major consequences of the conversion to IFRS on accounting outcomes. Findings – The empirical results indicate a more relevant total impact of such a transition on net income than equity. The analysis of individual adjustments shows a greater discrepancy between Italian GAAP and IFRS in the accounting treatment of intangible assets, income taxes, and business combinations with reference to both net income and equity. Originality/value – The main contribution of the paper is to investigate the impact of mandatory IFRS adoption for Italian listed companies’ financial results. Previous literature does not focus on such a specific country, but it offers a comparative approach to different effects of IFRS on European countries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Applied Accounting Research Emerald Publishing

The impact of IFRS on net income and equity: evidence from Italian listed companies

Michela Cordazzo
Journal of Applied Accounting Research , Volume 14 (1): 20 – May 24, 2013
Download PDF
20 pages

Loading next page...
 
/lp/emerald-publishing/the-impact-of-ifrs-on-net-income-and-equity-evidence-from-italian-mvvfwCdM2m
Publisher
Emerald Publishing
Copyright
Copyright © 2013 Emerald Group Publishing Limited. All rights reserved.
ISSN
0967-5426
DOI
10.1108/09675421311282540
Publisher site
See Article on Publisher Site

Abstract

Purpose – The mandatory conversion to IFRS (International Financial Reporting Standards) has represented much more than a change in accounting rules. Firms’ main concerns have been to understand the extent to which accounting differences between national GAAP and IFRS could affect their reported performance. The purpose of this paper is to address this concern by providing empirical evidence of the nature and the size of the differences between Italian accounting principles and IFRS. Design/methodology/approach – The total and individual differences between Italian GAAP and IFRS are identified and quantified in the reconciliations of net income and equity of companies listed on Borsa Italiana . The focus is to show the major consequences of the conversion to IFRS on accounting outcomes. Findings – The empirical results indicate a more relevant total impact of such a transition on net income than equity. The analysis of individual adjustments shows a greater discrepancy between Italian GAAP and IFRS in the accounting treatment of intangible assets, income taxes, and business combinations with reference to both net income and equity. Originality/value – The main contribution of the paper is to investigate the impact of mandatory IFRS adoption for Italian listed companies’ financial results. Previous literature does not focus on such a specific country, but it offers a comparative approach to different effects of IFRS on European countries.

Journal

Journal of Applied Accounting Research – Emerald Publishing

Published: May 24, 2013

Keywords: Accounting; IFRS transition; Financial reporting; Measurement; Italy

References

  • Reconciling national to international accounting standards: lessons from a study of Finnish corporate reports
    Adams, C.A.; Weetman, P.; Gray, S.J.
  • Reducing the burden of US GAAP reconciliations by foreign companies listed in the United States: the key question of materiality
    Adams, C.A.; Weetman, P.; Gray, S.J.
  • Non‐US firms’ accounting standard choices
    Ashbaugh, H.
  • Domestic accounting standards, international accounting standards, and the predictability of earnings
    Ashbaugh, H.; Pincus, M.
  • International accounting standards and accounting quality
    Barth, M.; Landsman, W.; Lang, M.
  • Delibera n. 14990/2005 del 14 aprile 2005 – Modifiche del Regolamento n. 11971/1999 in considerazione delle novità introdotte dall’entrata in vigore del regolamento comunitario n.1606/2002 relativo all’applicazione dei principi contabili internazionali
    Commissione Nazionale per le Società e la Borsa (CONSOB)
  • The impact of accounting principles on profits: the US versus Japan
    Cooke, T.
  • Voluntary adoption of non‐local GAAP in the European Union: a study of determinants and consequences
    Cuijpers, R.; Buijink, W.
  • International financial reporting convergence: evidence from three continental European countries
    Delvaille, P.; Ebbers, G.; Saccon, C.
  • Why firms comply voluntarily with IAS: an empirical analysis with Swiss data
    Dumontier, P.; Raffournier, B.
  • An empirical investigation of multinational firms’ compliance with international accounting standards
    El‐Gazzar, S.M.; Finn, P.M.; Jacob, R.
  • International accounting harmonization and the major developed stock market countries: an empirical study
    Emenyonu, E.N.; Gray, S.J.
  • Regulation (EC) No. 1606/2002 of the European parliament and of the council of 19 July 2002 on the application of international accounting standards
    European Union (EU)
  • Compliance with the disclosure requirements of Germany's new market: IAS versus US GAAP
    Glaum, M.; Street, D.L.
  • The impact of international accounting differences from a security‐analysis perspective: some European evidence
    Gray, S.J.
  • The adaptation of German accounting rules to IFRS: a legislative balancing act
    Haller, A.; Eierle, B.
  • A comparative analysis of the impact of accounting differences on profits and return on equity: differences between Swedish practice and US GAAP
    Hellman, N.
  • Financial statements effects of adopting international accounting standards: the case of Germany
    Hung, M.; Subramanyam, K.R.
  • Effect of adoption of international reporting standards in Belgium: the evidence from BEL‐20 companies
    Jermakowicz, E.K.
  • Firm characteristics of Swiss companies that utilize international accounting standards
    Murphy, A.B.
  • A Conceptual Framework for the Taxable Income of Businesses and How to Apply it Under IFRS
    Nobes, C.W.
  • Comparative International Accounting
    Nobes, C.W.; Parker, R.
  • The impact of financial accounting practices on the measurement of profit and equity: Australia versus the United States
    Norton, J.
  • Guida operativa per la transizione ai principi contabili internazionali (IAS/IFRS)
    Organismo Italiano di Contabilità (OIC)
  • Measuring conservatism – the case of published and DVFA/SG adjusted earnings for German firms
    Rees, W.
  • The introduction to international accounting standards in Europe: implications for international convergence
    Shipper, K.
  • Principi contabili internazionali e coordinamento con il TUIR
    Sottoriva, C.
  • Disclosure level and compliance with IASs: a comparison of companies with and without US listings and filings
    Street, D.L.; Bryant, S.M.
  • Large accounting firms’ survey reveals emergence of ‘two standard’ system in the European union
    Street, D.L.; Larson, R.
  • Assessing the acceptability of international accounting standards in the US: an empirical study of the materiality of US GAAP reconciliations by non‐US companies complying with IASC standards
    Street, D.L.; Nichols, N.B.; Gray, S.J.
  • Implementing IFRS: a case study of the Czech Republic
    Sucher, P.; Jindrichovska, I.
  • International convergence of accounting practices: choosing between IAS and US GAAP
    Tarca, A.
  • Earnings management under German GAAP and IFRS
    Van Tendeloo, B.; Vanstraelen, A.
  • Implementation of international accounting standards in Poland: can true convergence be achieved in practice?
    Vellam, I.
  • Il bilancio tra riforma delle società e introduzione dei principi contabili internazionali
    Verna, G.
  • International financial analysis and comparative corporate performance: the impact of UK versus US accounting principles on earnings
    Weetman, P.; Gray, S.J.
  • A comparative international analysis of the impact of accounting principles on profits: the USA versus the UK, Sweden and the Netherlands
    Weetman, P.; Gray, S.J.
  • Profit measurement and UK accounting standards: a case of increasing disharmony in relation to US GAAP and IASs
    Weetman, P.; Jones, E.A.E.; Adams, C.A.; Gray, S.J.
  • Changing from German GAAP to IFRS or US GAAP: a survey of German companies
    Weißenberger, B.; Stahl, A.B.; Vorstius, S.
  • The adoption of international accounting standards in the European Union
    Whittington, G.
  • Locating Accounting in its National Context: The Case of Italy
    Zambon, S.