AASB research report concludes that IFRS adoption has benefited the Australian economy

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27 Oct 2016

As part of a larger IFRS review project, the Australian Accounting Standards Board (AASB) has published Research Report No. 3 'The impact of IFRS adoption in Australia: Evidence from academic research'. After more than ten years of application of IFRSs in Australia, the AASB is looking into whether IFRS has improved the quality of financial reporting in Australia und whether it has improved comparability of Australian entities’ financial reporting with their global peers.

The third research report draws from 35 high-quality published empirical studies and looks the impact of IFRS adoption on publicly-listed Australian companies and other capital market participants. The key findings cited in the report are:

  • IFRS adoption by Australian companies appears to have had a positive outcome for investors and analysts based on research revealing improved analyst following, and analyst forecast accuracy.
  • Some studies reported positive outcomes through improvements in the value relevance of financial reports post-IFRS adoption, and reductions in the number of firms engaging in earnings management.
  • Most studies reported positive results in terms of the promotion of the comparability of Australian entities’ financial reporting practices with their global peers.
  • Survey research around the time of IFRS adoption revealed a degree of pessimism among managers from listed Australian companies towards many of the possible benefits from accounting convergence.

Based on these findings, the report concludes that (i) the FRC directive regarding adoption of IFRS in Australia continues to be appropriate; (ii) most of the research findings generally support the view that IFRS adoption has benefited the Australian economy; and (iii) there is no significant evidence suggesting reconsideration of adopting IFRS is warranted.

Please click to access the press release and the research report on the AASB website.

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