Specifics of IFRS Adoption by Central and Eastern European Countries: Evidence from Research

Open access

Abstract

The paper reviews recent literature on the specifics of adoption of International Financial Reporting Standards (IFRS) by the new EU members from the Central and Eastern Europe. Despite being members of the EU or OECD, the transition to a standard developed economy has not yet finished. The first part of the paper presents macroeconomic statistics and capital market data, which underline a unique economic structure of the region (relative unimportance of capital markets for raising capital, strong dependence on foreign direct investments) combined with the lacks in institutional environment. Under such conditions, the economic consequences of IFRS adoption can be unpredictable and adverse. The second part of the paper analyses the reflection of specifics of the IFRS adoption in the CEE region in research studies covered by the Thomson Reuters’ Web of Science database. The analysis reveals (a) cross-country disproportion in the research coverage of the area; (b) relatively low coverage of the IFRS research focusing on these transition countries in top journals.

Ahmed, A. S., Neel, M., and Wang, D., 2013. Does Mandatory Adoption of IFRS Improve Accounting Quality? Preliminary Evidence. Contemporary Accounting Research, 30(4), 1344-1372. doi:

Akerlof, G. A., 1970. The Market for 'Lemons': Quality Uncertainty and the Market Mechanism. The Quarterly Journal of Economics, 84(3), 488-500. doi:

Albu, C. N., and Albu, N., 2015. Introduction to the Special Issue on Accounting Academia in Central and Eastern Europe. Accounting & Management Information Systems, 14(2), 247-274.

Albu, C. N., Albu, N., and Alexander, D., 2014. When Global Accounting Standards Meet the Local Context: Insights from an Emerging Economy. Critical Perspectives on Accounting, 25(6), 489-510. doi:

Albu, N., and Albu, C. N., 2012. International Financial Reporting Standards in an Emerging Economy: Lessons from Romania. Australian Accounting Review, 22(4), 341-352. doi:

Albu, N., and Albu, C. N., 2014. IFRS Application in Central and South-Eastern European Countries. Accounting & Management Information Systems, 13(2), 182-197.

Albu, N., Lupu, I., and Sandu, R., 2014. Multinationals as Vectors of Corporate Governance Improvement in Emerging Economies in Eastern Europe: A Case Study. In S. Boubaker and D. K. Nguyen (Eds.), Corporate Governance in Emerging Markets (pp. 331-349). Berlin, Heidelberg: Springer Berlin Heidelberg. doi:

Alon, A., 2013. Complexity and Dual Institutionality: The Case of IFRS Adoption in Russia. Corporate Governance, 21(1), 42-57. doi:

André, P., Walton, P., and Yang, D., 2012. Voluntary Adoption of IFRS: A Study of Determinants for UK Unlisted Firms. omptabilit es et Innovation(may).

Angelkort, H., Sandt , J., and Weißenberger, B. E., 2008. Controllership under IFRS: Some Critical Observations from a German-Speaking Country. Institut für Wirtschaftswissenschaft .

Ashbaugh, H., 2001. Non-US Firms' Accounting Standard Choices. Journal of Accounting and Public Policy, 20(2), 129-153. doi:

Ball, R., 2001. Infrastructure Requirements for an Economically Efficient System of Public Financial Reporting and Disclosure. Brookings-Wharton Papers on Financial Services, 1(1), 127-169. doi:

Ball, R., 2006. International Financial Reporting Standards (IFRS): Pros and Cons for Investors. Accounting and Business Research, 36(1), 5-27. doi:

Ball, R., Kothari, S. P., and Robin, A., 2000. The Effect of International Institutional Factors on Properties of Accounting Earnings. Journal of Accounting and Economics, 29(1), 1-51. doi:

Ball, R., Robin, A., and Wu, J. S., 2003. Incentives versus Standards: Properties of Accounting Income in Four East Asian Countries. Journal of Accounting and Economics, 36(1-3), 235-270. doi:

Barth, M. E., Landsman, W. R., and Lang, M. H., 2008. International Accounting Standards and Accounting Quality. Journal of Accounting Research, 46(3), 467-498. doi:

Bassemir, M., 2011. Why Do Private Firms Adopt IFRS? doi:

Berger, A., 2010. The Development and Status of Enforcement in the European Union. Accounting in Europe, 7(1), 15-35. doi:

Berk, A. S., and Loncarski, I., 2011. Are Exogenous Requirements Sufficient to Induce Corporate Risk Management Activities? Post-Communist Economies, 23(1), 119-137. doi:

Bruggemann, U., Hitz, J.-M., and Sellhorn, T., 2013. Intended and Unintended Consequences of Mandatory IFRS Adoption: A Review of Extant Evidence and Suggestions for Future Research. European Accounting Review, 22(1), 1-37. doi:

Callao, S., and Jarne, J. I., 2010. Have IFRS Affected Earnings Management in the European Union? Accounting in Europe, 7(2), 159-189. doi:

Christensen, H. B., 2012. Why Do Firms Rarely Adopt IFRS Voluntarily? Academics Find Significant Benefits and the Costs Appear to Be Low. Review of Accounting Studies, 17(3), 518-525. doi:

Christensen, H. B., Lee, E., and Walker, M., 2007. Cross-Sectional Variation in the Economic Consequences of International Accounting Harmonization: The Case of Mandatory IFRS Adoption in the UK. The International Journal of Accounting, 42(4), 341-379. doi:

Claessens, S., and Djankov, S., 1999. Ownership Concentration and Corporate Performance in the Czech Republic. Journal of Comparative Economics, 27(3), 498-513. doi:

Colwyn Jones, T., and Luther, R., 2005. Anticipating the Impact of IFRS on the Management of German Manufacturing Companies: Some Observations from a British Perspective. Accounting in Europe, 2(1), 165-193. doi:

Cuijpers, R., and Buijink, W., 2005. Voluntary Adoption of Non-Local GAAP in the European Union: A Study of Determinants and Consequences. European Accounting Review, 14(3), 487-524. doi:

Daske, H., Hail, L., Leuz, C., and Verdi, R., 2008. Mandatory IFRS Reporting around the World: Early Evidence on the Economic Consequences. Journal of Accounting Research, 46(5), 1085-1142. doi:

Daske, H., Hail, L., Leuz, C., and Verdi, R., 2013. Adopting a Label: Heterogeneity in the Economic Consequences around IAS/IFRS Adoptions. Journal of Accounting Research, 51(3), 495-547. doi:

De George, E. T., Li, X., and Shivakumar, L., 2016. A Review of the IFRS Adoption Literature. Review of Accounting Studies, 21(3), 898-1004. doi:

Ding, Y., Hope, O.-K., and Schadewitz, H. J., 2009. Firm-Level Transparency in the Former East Bloc: Empirical Evidence from the Baltic Region. http://www.ssrn.com/abstract=1098193. doi:

Djatej, A., Gao, G., Sarikas, R. H. S., and Senteney, D. L., 2011. Eastern and Western European Firms Public and Private Information Quality: The Comparative Impact of Degree of Implementation of IFRS. Emerging Markets Review, 12(2), 111-129. doi:

Dobija, D., and Klimczak, K. M., 2010. Development of Accounting in Poland: Market Efficiency and the Value Relevance of Reported Earnings. The International Journal of Accounting, 45(3), 356-374. doi:

Dumontier, P., and Raffournier, B., 1998. Why Firms Comply Voluntarily with IAS: An Empirical Analysis with Swiss Data. Journal of International Financial Management & Accounting, 9(3), 216-245. doi:

El-Gazzar, S. M., Finn, P. M., and Jacob, R., 1999. An Empirical Investigation of Multinational Firms' Compliance with International Accounting Standards. The International Journal of Accounting, 34(2), 239-248. doi:

Ernest, J., 2014. Cesky prumysl je ,,nas' jen z poloviny. [Only Half of the Czech Industry Is 'Ours']. Statistika&My, 4(10), 18-19.

Francis, J. R., Khurana, I. K., Martin, X., and Pereira, R., 2008. The Role of Firm-Specific Incentives and Country Factors in Explaining Voluntary IAS Adoptions: Evidence from Private Firms. European Accounting Review, 17(2), 331-360. doi:

Glaum, M., Schmidt, P., Street, D. L., and Vogel, S., 2013. Compliance with IFRS 3- and IAS 36- Required Disclosures across 17 European Countries: Company- and Country-Level Determinants. Accounting and Business Research, 43(3), 163-204. doi:

Guerreiro, M. S., Rodrigues, L. L., and Craig, R., 2012. Voluntary Adoption of International Financial Reporting Standards by Large Unlisted Companies in Portugal - Institutional Logics and Strategic Responses. Accounting, Organizations and Society, 37(7), 482-499. doi:

Honkova, I., 2015. International Financial Reporting Standards Applied in the Czech Republic. E+M. Ekonomie a Management, 18(3), 84-90. doi:

Houqe, M. N., van Zijl, T., Dunstan, K., and Waresul Karim, A. K. M., 2012. The Effect of IFRS Adoption and Investor Protection on Earnings Quality around the World. The International Journal of Accounting, 47(3), 333-355. doi:

Hvozdarova, J., 2002. Development, Current State and Trends in Balance Sheet Consolidation. Ekonomicky Casopis, 50(2), 317-330.

Hvozdarova, J., 2004. Consolidation of the Financial Statements in the Process of Economy Transformation in the Slovak Republic. Ekonomicky Casopis, 52(5), 572-583.

Iatridis, G., and Rouvolis, S., 2010. The Post-Adoption Effects of the Implementation of International Financial Reporting Standards in Greece. Journal of International Accounting, Auditing & Taxation, 19(1), 55-65. doi:

Istrate, C., Georgescu, I. E., Carp, M., Robu, I. B., and Pavaloaia, L., 2015. Accruals Earnings Management in Emerging Markets under the Transition to IFRS: The Case of Romanian Listed Companies. Transformations in Business & Economics, 14, 393-411.

Jackling, B., Howieson, B., and Natoli, R., 2012. Some Implications of IFRS Adoption for Accounting Education. Australian Accounting Review, 22(4), 331-340. doi:

Jaruga, A., Fijalkowska, J., Jaruga-Baranowska, M., and Frendzel, M., 2007. The Impact of IAS/IFRS on Polish Accounting Regulations and Their Practical Implementation in Poland. 4(1), 67-78. doi:

Jeanjean, T., and Stolowy, H., 2008. Do Accounting Standards Matter? An Exploratory Analysis of Earnings Management before and after IFRS Adoption. Journal of Accounting and Public Policy, 27(6), 480-494. doi:

Kahle, H., and Schulz, S., 2011. Harmonizing the Corporate Tax Base in the European Union. Betriebswirtschaftliche Forschung und Praxis, 63(5), 455-475.

Klimczak, K. M., 2011. Market Reaction to Mandatory IFRS Adoption: Evidence from Poland. Accounting & Management Information Systems, 10(2), 228-248.

Kostova, T., and Roth, K., 2002. Adoption of an Organizational Practice by Subsidiaries of Multinational Corporations: Institutional and Relational Effects. Academy of Management Journal, 45(1), 215-233. doi:

Kučera, L., 2015. Odliv dividend zesílil. [Dividends Outflows Intensified]. Statistika&My, 5(6).

Lee, E., Walker, M., and Christensen, H. B., 2008. Mandating IFRS: Its Impact on the Cost of Equity Capital in Europe. London: The Association of Chartered Certified Accountants.

Leuz, C., Nanda, D., and Wysocki, P. D., 2003. Earnings Management and Investor Protection: An International Comparison. Journal of Financial Economics, 69(3), 505-527. doi:

Leuz, C., and Wysocki, P., 2008. Economic Consequences of Financial Reporting and Disclosure Regulation: A Review and Suggestions for Future Research. papers.ssrn.com/sol3/papers.cfm?abstract_id=1105398. doi:

Li, S., 2010. Does Mandatory Adoption of International Financial Reporting Standards in the European Union Reduce the Cost of Equity Capital? The Accounting Review, 85(2), 607-636. doi:

MacDonald, G., 2002. The Taxation of Business Income: Aligning Taxable Income with Accounting Income. TLRC Discussion Paper, 2. http://www.ifs.org.uk/comms/dp2.pdf.

Macias, M., and Muino, F., 2011. Examining Dual Accounting Systems in Europe. The International Journal of Accounting, 46(1), 51-78. doi:

Malikova, O., and Brabec, Z., 2012. The Influence of a Different Accounting System on Informative Value of Selected Financial Ratios. Technological and Economic Development of Economy, 18(1), 149-163. doi:

Matonti, G., and Iuliano, G., 2012. Voluntary Adoption of IFRS by Italian Private Firms: A Study of the Determinants. Eurasian Business Review, 2(2), 43-70. doi:

Mejzlik, L., 2006. Možnosti a rizika technologického řešení převodu českých účetních závěrek do IFRS. Český finanční a účetní časopis, 1(1), 84-98. doi:

Mejzlik, L., Arltova, M., Prochazka, D., and Vitek, L., 2015. Implementace Mezinarodnich standardu ucetniho vykaznictvi v Ceske republice a jeji vliv na zdaneni podniku. Politicka Ekonomie, 63(7), 811-832. doi:

Mickiewicz, T. M., 2009. Hierarchy of Governance Institutions and the Pecking Order of Privatisation: Central-Eastern Europe and Central Asia Reconsidered. Post-Communist Economies, 21(4), 399-423. doi:

Morris, R. D., 1987. Signalling, Agency Theory and Accounting Policy Choice. Accounting and Business Research, 18(69), 47-56. doi:

Murphy, A. B., 1999. Firm Characteristics of Swiss Companies That Utilize International Accounting Standards. The International Journal of Accounting, 34(1), 121-131. doi:

Nobes, C., 2010. On Researching into the Use of IFRS by Private Entities in Europe. Accounting in Europe, 7(2), 213-226. doi:

Oestreicher, A., and Spengel, C., 2007. Tax Harmonisation in Europe: The Determination of Corporate Taxable Income in the EU Member States. ZEW Discussion Papers. ftp://ftp.zew.de/pub/zew-docs/dp/dp07035.pdf.

Oliver, C., 1991. Strategic Responses to Institutional Processes. Academy of Management Review, 16(1), 145-179. doi:

Pownall, G., and Wieczynska, M., 2012. Deviations from the Mandatory Adoption of IFRS in the European Union: Implementation, Enforcement, Incentives, and Compliance. SSRN Electronic Journal. http://ssrn.com/abstract=1919805.

Prescott, G. L., and Vann, C. E., 2015. The Effects of National Culture on Financial Statement Comparability: A Survey of Research Findings. Journal of Corporate Accounting & Finance, 26(6), 37-45. doi:

Prochazka, D., 2011. Benefits and Costs of Preparing IFRS Statements by Non-Listed Companies: Evidence from the Czech Republic. Proceedings of the International Conference Accounting and Management Information Systems, 6(1), 211-228.

Prochazka, D., 2012a. Development of Financial and Management Accounting Systems of Czech Companies after the IFRS Adoption. Proceedings of the International Conference Accounting and Management Information Systems, 7(1), 871-887.

Prochazka, D., 2012b. Financial Conditions and Transparency of the Czech Professional Football Clubs. Prague Economic Papers, 21(4), 504-521. doi:

Prochazka, D., 2016a. Financial Performance of Czech Subsidiaries under Control of the EU Listed Companies. European Financial Systems, 2016, 623-629.

Prochazka, D., 2016b. Specifics of IFRS Adoption by Czech Private Companies. Procedia: Social and Behavioral Sciences, 220, 363-372. doi:

Prochazka, D., 2016c. Vynucené přijetí IFRS českými nekótovanými podniky: hodnocení přínosů a nákladů. Acta Oeconomica Pragensia, 2, 46-62. doi:

PwC, 2014. IPO Watch Europe 2013.

Šimberová, I., and Kocmanová, A., 2013. Modelling of Corporate Governance Performance Indicators. The Engineering Economist, 23(5). doi:

Soderstrom, N. S., and Sun, K. J., 2007. IFRS Adoption and Accounting Quality: A Review. European Accounting Review, 16(4), 675-702. doi:

Spence, M., 1973. Job Market Signaling. The Quarterly Journal of Economics, 87(3), 355-374. doi:

Šteker, K., 2013. Conversion Czech Financial Statements into IFRS. In E. Jirickova, A. Knapkova and E. Pastuszkova (Eds.), Finance and the Performance of Firms in Science, Education, and Practice (pp. 771-781).

Sucher, P., and Jindrichovska, I., 2004. Implementing IFRS: A Case Study of the Czech Republic. 1(1), 109-141. doi:

Svoboda, P., 2007. Valuation of Tangible Fixed Assets pursuant to the Czech Accounting Law and International Accounting Standards. Agricultural Economics, 53(10), 466-474.

Svoboda, P., 2008. Balancing of the Chosen Intangible Fixed Assets according to the Czech Accounting Legislation, German Accounting Systems and International Accounting Standards. Agricultural Economics, 54(7), 314-321.

Svoboda, P., 2011. Application of New Approaches in Recognizing Leases on the Part of the Lessee in the Selected Companies in the Czech Republic. Agricultural Economics, 57(7), 340-349.

Vojáčková, H., 2015. Financial Instruments: Meeting Disclosure Requirements Defined by IFRS 7 in Energy Industry in the Czech Republic. Procedia Economics and Finance, 25, 176-184. doi:

Weissenberger, B. E., and Angelkort, H., 2011. Integration of Financial and Management Accounting Systems: The Mediating Influence of a Consistent Financial Language on Controllership Effectiveness. Management Accounting Research, 22(3), 160-180. doi:

Yang, D., 2014. Exploring the Determinants of Voluntary Adoption of IFRS by Unlisted Firms: A Comparative Study between the UK and Germany. China Journal of Accounting Studies, 2(2), 118-136. doi:

Yang, Q., Mudambi, R., and Meyer, K. E., 2008. Conventional and Reverse Knowledge Flows in Multinational Corporations. Journal of Management, 34(5), 882-902. doi:

Zehri, F., and Chouaibi, J., 2013. Adoption Determinants of the International Accounting Standards IAS/IFRS by the Developing Countries. Journal of Economics, Finance and Administrative Science, 18(35), 56-62. doi:

Annals of the Alexandru Ioan Cuza University - Economics

The Journal of "Alexandru Ioan Cuza" University from Iasi

Journal Information

Metrics

All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 264 192 16
PDF Downloads 108 100 9