Determinants and Consequences of IFRS Adoption: Perspectives on the Romanian Institutional Factors
Author:
Univ. Prof. Ion IONAŞCU, Ph. D.; Lecturer Mihaela IONAŞCU, Ph. D.; Lucian MUNTEANU, Ph. D. Student
JEL:
G32, M41
DOI:
Keywords:
IFRS adoption, incentives, economic benefits, institutional factors
Abstract:
The purpose of this paper is to capture the perception of the finance directors of listed Romanian companies regarding the economic benefits of IFRS implementation and the institutional factors that may affect their occurrence. The results showed that the majority of finance directors believe that the IFRS adoption can improve the quality of financial reporting by means of increased international comparability and the switch to fair values. However, the finance directors indicated a series of institutional factors (such as the link between accounting and taxation, and the lack of active markets needed for fair value measurements) that are likely to prevent financial statements drafted according to IFRS to provide quality accounting information, despite the high quality standards on which they are based. Furthermore, the finance directors identified structural institutional factors (such as the double accounting system operating in Romania, or the capital market inefficiency) that are expected to limit the potential economic benefits for the capital market that can be derived from accounting information conforming to IFRS, regardless of its qualitative characteristics.\r\n\r\n