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Voluntary IAS 1 accounting disclosures prior to official IAS adoption: An empirical investigation of UK firms

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  • Iatridis, George
  • Valahi, Styliani
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    Abstract

    This paper focuses on firms' voluntary compliance with the reporting requirements of the International Accounting Standard (IAS) 1 before the official adoption of IASs. The paper seeks to identify the motives for the voluntary adoption of IAS 1 and investigates the relation to the provision of voluntary accounting disclosures, the increase in equity capital, managers' remuneration and firms' stock returns. The study shows that the decision-making process of firms is significantly influenced by the intention to improve key financial measures, such as leverage, profitability and growth. Firms would tend to adopt an accounting policy or regulation when they feel that adoption would favourably impact on their financial situation. For example, the study indicates that firms voluntarily adopted IAS 1 before the official IAS adoption date in order to provide evidence of superior managerial ability and high quality reported accounting information. It is found that firms that perform well are more motivated to voluntarily abide by IAS 1. The study also reports that firms that provide voluntary accounting disclosures and perform increases in their equity capital appear to voluntarily adopt IAS 1. Similar findings are obtained for firms that display higher management remuneration and stock returns.

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    File URL: http://www.sciencedirect.com/science/article/B7CPK-4S9G981-1/2/777e07b75e9d9466a2e13a007185816f
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    Bibliographic Info

    Article provided by Elsevier in its journal Research in International Business and Finance.

    Volume (Year): 24 (2010)
    Issue (Month): 1 (January)
    Pages: 1-14

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    Handle: RePEc:eee:riibaf:v:24:y:2010:i:1:p:1-14

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    Web page: http://www.elsevier.com/locate/ribaf

    Related research

    Keywords: Accounting policy choice Voluntary accounting disclosure International accounting standard 1;

    References

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    Cited by:
    1. Siougle, Georgia & Spyrou, Spyros I. & Tsekrekos, Andrianos E., 2014. "Conference calls around merger and acquisition announcements: Do they reduce information asymmetry? UK Evidence," Research in International Business and Finance, Elsevier, vol. 30(C), pages 148-172.

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