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Does Transition to IFRS 16 Affect Companies Financial Performance: The Case of Baltic Listed Companies

Author

Listed:
  • Legenzova Renata

    (PhD, professor at the Faculty of Economics and Management, Vytautas Magnus University, Lithuania.)

  • Žilaitytė Liveta

    (Financial project controller at Nokia, Lithuania.)

Abstract

The paper assesses the effect of transitioning to IFRS 16 on Baltic listed companies’ financial performance. The results revealed that 74.63% of sample companies were affected with an average 8.68% increase in total assets and 13.03% increase in total liabilities. Return on assets and assets turnover ratios of the affected companies decreased by an average of 8.33%, the quick ratio and current ratio decreased by 7.84%, while the debt-to-equity ratio increased by 28.63%. The sectors most heavily impacted by transitioning to IFRS 16 were communication services and basic materials sectors.

Suggested Citation

  • Legenzova Renata & Žilaitytė Liveta, 2023. "Does Transition to IFRS 16 Affect Companies Financial Performance: The Case of Baltic Listed Companies," Management of Organizations: Systematic Research, Sciendo, vol. 89(1), pages 67-86, June.
    • Handle: RePEc:vrs:morgsr:v:89:y:2023:i:1:p:67-86:n:4
    DOI: 10.2478/mosr-2023-0005
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    References listed on IDEAS

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    1. Jennifer Altamuro & Rick Johnston & Shailendra (Shail) Pandit & Haiwen (Helen) Zhang, 2014. "Operating Leases and Credit Assessments," Contemporary Accounting Research, John Wiley & Sons, vol. 31(2), pages 551-580, June.
    2. Francesca Magli & Alberto Nobolo & Matteo Ogliari, 2018. "The Effects on Financial Leverage and Performance: The IFRS 16," International Business Research, Canadian Center of Science and Education, vol. 11(8), pages 76-89, August.
    3. Elisabetta Barone & Jacqueline Birt & Soledad Moya, 2014. "Lease Accounting: A Review of Recent Literature," Accounting in Europe, Taylor & Francis Journals, vol. 11(1), pages 35-54, June.
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