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The Impact of the Adoption of IFRS 16 on Accounting Conservatism in Airlines: The Case of Royal Airlines of Jordan

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  • Ola Mohammad Khersiat

Abstract

Purpose: This study aims to investigate the impact of adopting IFRS 16 on accounting conservatism in airlines. Design/Methodology/Approach: The researcher has examined the impact of applying the IFRS 16 in the year of adoption 2019 and in the year before to identify the connection between the components of financial statements and accounting conservatism before and after the application of the standard, by carrying out an analytical study of the financial statements. Findings: The study concludes that there is no statistically significant impact of the adoption of the IFRS 16 on the connection among the components of financial statements, accruals and Basu models. Additionally, there is no impact of the connection between the components of financial statements and accounting conservatism before the adoption of the standard. Practical Implications: The study recommends the need to focus on accounting conservatism given the importance of the information presented in conservative financial statements and reports. Originality/Value: The study analysed the impact of IFRS-16 for first time in the airline industry. The results showed that there is no impact of accounting conservatism on the items of the financial position statement whether before or after the application of IFRS16 in the airline industry.

Suggested Citation

  • Ola Mohammad Khersiat, 2020. "The Impact of the Adoption of IFRS 16 on Accounting Conservatism in Airlines: The Case of Royal Airlines of Jordan," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 589-601.
    • Handle: RePEc:ers:ijebaa:v:viii:y:2020:i:3:p:589-601
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    References listed on IDEAS

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    1. Rolf Uwe Fülbier & Jorge Lirio Silva & Marc Henrik Pferdehirt, 2008. "Impact of Lease Capitalization on Financial Ratios of Listed German Companies," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 60(2), pages 122-144, April.
    2. Ryan Lafond & Sugata Roychowdhury, 2008. "Managerial Ownership and Accounting Conservatism," Journal of Accounting Research, Wiley Blackwell, vol. 46(1), pages 101-135, March.
    3. Panayiotis G. Curtis & Michael Hanias & Eleftherios Kourtis & Mixalis Kourtis, 2020. "Data Envelopment Analysis (DEA) and Financial Ratios: Α Pro-Stakeholders’ View of Performance Measurement for Sustainable Value Creation of the Wind Energy," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 326-350.
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    More about this item

    Keywords

    IFRS-16; conservatism; financial position; cash flows from operating activities (C.F.O); cash flows from financing activities (C.F.F); cash flows from investment activities (C.F.I).;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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