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Does the adoption of Ind AS affect the performance of firms in India?

Author

Listed:
  • M N, Nikhil
  • Chakraborty, Suman
  • B M, Lithin
  • Lobo, Lumen Shawn

Abstract

The increasing prevalence of IFRS adoption has resulted in enhanced transparency, accounting quality, and comparability of financial information among firms, especially in emerging markets worldwide, including India. Nonetheless, the question of whether the adoption of IFRS has led to improved firm performance persists. To address this question, this study examines the impact of transitioning from India’s GAAP-based accounting standards to IFRS-converged standards (Ind AS) on non-financial firms’ performance from 2013 to 2022. The empirical findings reveal that the convergence of Indian accounting standards with IFRS significantly improves firm performance, as demonstrated by a positive coefficient of 0.0166 for Ind AS in the fixed-effect model. The study also validates the original empirical findings using the return on equity (ROE) measure of firm performance, which yielded a coefficient of 0.0197, further confirming that the adoption of Ind AS leads to an increase in the performance of Indian firms. These results contribute new insights to the existing IFRS literature and have implications for policymakers and managers.

Suggested Citation

  • M N, Nikhil & Chakraborty, Suman & B M, Lithin & Lobo, Lumen Shawn, 2023. "Does the adoption of Ind AS affect the performance of firms in India?," MPRA Paper 117247, University Library of Munich, Germany, revised 18 Apr 2023.
    • Handle: RePEc:pra:mprapa:117247
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    More about this item

    Keywords

    emerging market; firm profitability; fixed effect model; IFRS convergence; Nifty 500; panel data; return on assets;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • 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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