5. Conclusion
This review analyzes the economic and financial reporting consequences of IFRS adoption. Specifically, it provides an ordered documentation of archival literature on how IFRS adoption has impacted financial reporting with respect to comparability, foreign trade and investment, value relevance, earnings management, accounting conservatism, analysts’ forecasts, market liquidity, cost of equity, cost of debt, and firm performance. Overall, the positive effects of IFRS are associated with firms in strong enforcement regimes that have incentives to comply. This survey find enforcement of IFRS to be a recurrent theme throughout the literature reviewed and, thus an area, which requires development. More specifically, there is a need to develop a mechanism for the enforcement of accounting standards internationally. Hence, to maximize the effectiveness of international accounting standards, there is a need for collaboration between standard setters and regulatory bodies around the world.
Standard setting is a process that is constantly changing and it is clear that, from an international perspective, there are benefits to harmonizing accounting standards. Another area of concern which emerged in the literature is the ability for standards to be applied differently, jeopardizing the efficacy of IFRS as a unified means of providing comparable and transparent information. To combat potential issues of standard abuse and inconsistent application, the IASB may wish to consider reducing some of the complexities and volume of disclosures that are presently required. To avoid uncertainty and translation issues, the IASB may also wish to issue more detailed interpretation of standards. The benefits of such measures may be observed through the elimination of the likely abuse of various options available in the standards, so that users of financial information will have more faith in the integrity of a firm’s reports.
