Financial Management Perspective

Financial Management Perspective

The effect of applying international financial reporting standards on the financial performance measure of companies in Iran

Document Type : Original Article

Authors
Seyed Sajad Mousavi Motahar 1
Ali Rahmani 2
Hooshang Amiri 3
1 Ph.D. Candidate in Accounting, Khorramshahr International Branch, Islamic Azad University, Khorramshahr, Iran.
2 Prof., Department of Accounting, Alzahra University, Tehran, Iran.
3 Assistant Prof., Department of Accounting, Abadan Branch, Islamic Azad University, Abadan, Iran.
10.52547/jfmp.12.40.69
Abstract
Financial reports are an important source for capital market participants to make decisions. In the last two decades, the development and acceptance of international financial reporting standards (IFRS) has caused extensive changes in financial reports. Therefore, the purpose of this article is to examine the financial and economic effects of implementing IFRS in Iranian companies, specifically, the quantitative impact of IFRS implementation on financial performance measure based on accounting information has been investigated in this study. The financial measures have been extracted by adapting Stewart's model from the available financial statements of 10 listed companies during the years 2017, 2018, 2019 and 2020 according to IFRS and Iranian Accounting Standards. Due to the small number of samples, non-parametric t-tests with bootstrapping and Wilcoxon tests were used to check the hypotheses. The findings show that the implementation of IFRS has caused a significant difference in profitability measure including return on assets, return on equity, earning per share and book value of shares and financial leverage criteria including long-term debt ratio, debt coverage ratio and equity ratio. But there is no significant difference between liquidity and asset management measure. Considering the significant differences in the values of financial measure after the implementation of IFRS, it is necessary for investors and financial analysts to consider the possible effects of the public release of financial reports of Iranian companies based on IFRS in their predictions and decision making.
Keywords
International Financial Reporting Standards (IFRS)
National Accounting Standards of Iran
Accounting Regime
Financial Performance Measures
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Financial Management Perspective
Volume 12, Issue 40
Winter 2023
Pages 69-96