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The impact of IFRS on net income and equity: evidence from Italian listed companies

Author

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  • Michela Cordazzo

Abstract

Purpose - The mandatory conversion to IFRS (International Financial Reporting Standards) has represented much more than a change in accounting rules. Firms’ main concerns have been to understand the extent to which accounting differences between national GAAP and IFRS could affect their reported performance. The purpose of this paper is to address this concern by providing empirical evidence of the nature and the size of the differences between Italian accounting principles and IFRS. Design/methodology/approach - The total and individual differences between Italian GAAP and IFRS are identified and quantified in the reconciliations of net income and equity of companies listed onBorsa Italiana. The focus is to show the major consequences of the conversion to IFRS on accounting outcomes. Findings - The empirical results indicate a more relevant total impact of such a transition on net income than equity. The analysis of individual adjustments shows a greater discrepancy between Italian GAAP and IFRS in the accounting treatment of intangible assets, income taxes, and business combinations with reference to both net income and equity. Originality/value - The main contribution of the paper is to investigate the impact of mandatory IFRS adoption for Italian listed companies’ financial results. Previous literature does not focus on such a specific country, but it offers a comparative approach to different effects of IFRS on European countries.

Suggested Citation

  • Michela Cordazzo, 2013. "The impact of IFRS on net income and equity: evidence from Italian listed companies," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 14(1), pages 54-73, May.
    • Handle: RePEc:eme:jaarpp:v:14:y:2013:i:1:p:54-73
    DOI: 10.1108/09675421311282540
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    Citations

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    Cited by:

    1. T.P. Ghosh, 2019. "Impact of IFRS Convergence in India: An Evidence from First-Time Adoption of Indian Accounting Standards," Accounting and Finance Research, Sciedu Press, vol. 8(1), pages 157-157, February.
    2. Maria Carmen HUIAN, 2015. "Impact Of The Ifrs Adoption On Financial Assets And Liabilities. Empirical Evidence From Bucharest Stock Exchange," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 16, pages 69-90, December.
    3. Dana Kubickova & Irena Jindrichovska, 2016. "Comparability and Reliability of Financial Information in the Sector of Czech SMES (ten years of IFRS as a part of Czech accounting context)," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 64-77.
    4. Roberto Di Pietra, 2017. "The Role and Current Status of IFRS in the Completion of National Accounting Rules – Evidence from Italy," Accounting in Europe, Taylor & Francis Journals, vol. 14(1-2), pages 121-130, May.
    5. Nicola Moscariello & Len Skerratt & Michele Pizzo, 2014. "Mandatory IFRS adoption and the cost of debt in Italy and UK," Accounting and Business Research, Taylor & Francis Journals, vol. 44(1), pages 63-82, February.

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