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Why choosing IFRS? Benefits of voluntary adoption by European private companies

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  • Bertrand, Jérémie
  • de Brebisson, Hélène
  • Burietz, Aurore

Abstract

In 2005, International Financial Reporting Standards (IFRS) have been legally adopted by listed firms to facilitate the harmonization of accounting practices. However, IFRS remain an option for non-listed firms in some countries. We investigate whether European privately held firms can raise more debt when they voluntarily report their consolidated financial information according to IFRS rather than local accounting rules. Using fixed effects regressions on 8391 firms in 22 European Union (EU) countries from 2005–2018, we document that IFRS adoption leads to more private debt issue for non-listed firms. This accounting option could be particularly useful for opaque firms or firms located in common law countries. Our results contribute to the debate on European accounting policy for non-listed firms.

Suggested Citation

  • Bertrand, Jérémie & de Brebisson, Hélène & Burietz, Aurore, 2021. "Why choosing IFRS? Benefits of voluntary adoption by European private companies," International Review of Law and Economics, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:irlaec:v:65:y:2021:i:c:s0144818820301812
    DOI: 10.1016/j.irle.2020.105968
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    More about this item

    Keywords

    IFRS; Bank debt; Non-listed entities;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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