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Timing of the effect on the real earnings management (REM3 ft ). This figure presents the K3 f × YEAR coefficients obtained from estimating Model (1) on REM3 ft , where we replace POST t with year indicator variables. The year 2010 serves as a base year. The bold dots indicate the estimated coefficients. Vertical bars indicate 95% confidence intervals for the estimated coefficients. Dashed bars separate the pre-treatment and post-treatment periods.
Source publication
In 2014, all larger Swedish private firms were required, at short notice, to adopt a new reporting standard (K3) based on IFRS for SMEs (2009 version). Using this shock to the reporting environment, we study the effects of the new reporting standard on groups’ financial reporting properties and cost of debt financing. We find that, following the in...
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Citations
... • The findings of this research indicated that there are substantial positive links between the financial success of small and mediumsized enterprises (SMEs) and the following factors: opportunity focus, customer intensity, resource leveraging, and value creation. 14. (Hellman et al., 2022) The impact of an IFRS for SMEs-based standard on financial reporting properties and cost of debt financing: Evidence from Swedish private firms Secondary data • Our findings indicate that the comparability of financial reporting improved after the implementation of IFRS for small and mediumsized enterprises (SMEs), and that the implementation of IFRS for SMEs was linked to a decrease in the cost of debt at the group level as shown by our findings. 15. ...
The aim of this research was to conduct a systematic review of the existing literature regarding the difficulties associated with the adoption and implementation of International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs). Additionally, the study sought to propose strategies that could assist with mitigating the complexities relating to IFRS for SMEs adoption and implementation in South Africa. When analysing the related literature, the study employed the Systematic Literature Review (SLR) method and followed the Preferred Reporting Items for Systematic reviews and Meta Analyses (PRISMA) guidelines. According to the inclusion criteria, the literature regarded as relevant related to studies published during 2017–2023. Furthermore, this study adopted the institutional theory due to its relevance in modelling the roles of regulators and SMEs in the adoption and implementation of IFRS for SMEs. The study found that the adoption and implementation of IFRS for SMEs presents several challenges, such as low level of education, costs related to the adoption, political pressures, and training and support by regulatory bodies as well as cultural dimensions. To overcome these obstacles, it is suggested that campaigns be used to raise recognition about the latter, providing extensive educational and regular training for accounting professionals. The study provides an insightful review of the challenges of IFRS for SMEs with specific attention on South Africa, informing the accounting standard setters, policymakers, and professional bodies of the accounting standards.
... Yue Feng (2023) found that good quality of internal control helps to ease corporate financing constraints [4] . Niclas,Henrik and Milda (2022) found that high-quality financial reports can reduce information asymmetry and reduce financing costs [5] . Du Yan and Chen Jian (2023) show information disclosure can reduce equity financing cost [6] . ...
... Similar difference-in-difference studies on the effect of IFRS on earnings properties use firms from countries that did not adopt IFRS as a control group Capkun et al., 2016;Hellman et al., 2022). Hail et al. (2010) point out that this makes the analysis susceptible to confounding country-specific effects that could arise because of other concurrent institutional changes and economic shocks. ...
This paper examines changes in earnings quality, including accruals, earnings smoothing, and asymmetric loss recognition schedules, following the mandatory adoption of IFRS in Ecuador. Using 5,436 year-firm observations, we employ a differences-in-differences approach, comparing the effect of IFRS on an initial group of adopters (publicly traded companies) with non-adopters (small and medium-sized enterprises) with essentially the same financial reporting requirements. Our findings indicate a decrease in accrual levels and more timely recognition of losses, with no evidence of changes in earnings smoothing. These results suggest that companies use the increased flexibility of IFRS to meet debt holders' demand for timely loss recognition. The decrease in accruals suggests earnings management for tax purposes. This study contributes to the literature on IFRS and earnings quality by using a more robust research design and providing evidence on the consequences of IFRS adoption in an emerging market dominated by debt capital and family-owned firms.
Purpose
This study aims to investigate the determinants influencing the prospective adoption of International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs) in Morocco.
Design/methodology/approach
Framed within the theoretical lens of Diffusion of Innovations (DoI) theory, the research employs a two-stage methodological approach using a survey of 102 Moroccan SMEs. With Principal Components Analysis, new factors were identified while Logistic regression (Logit) assesses the likelihood of IFRS for SMEs’ adoption, focusing on organizational, professional and innovation-related variables.
Findings
The study reveals that Moroccan SMEs perceive IFRS for SMEs as insufficiently aligned with their operational realities, offering limited perceived benefits within the local context. While there is a preference for converging with internationally recognized standards, respondents advocate for contextual adaptations to address specific needs. Hypothesis testing suggests that none of the examined factors had a statistically significant impact on the likelihood of IFRS for SMEs’ adoption, except for the facilitating properties of standards.
Research limitations/implications
This study focuses on a single country, which may limit the generalizability of findings to other contexts.
Practical implications
The findings underscore the necessity for policymakers to address systemic deficiencies in the existing accounting framework. Additionally, they should shift from passive enablers to active engagement drivers by linking tax incentives to measurable IFRS for SMEs’ adoption milestones rather than providing blanket support. To support a smooth transition, professional bodies should move beyond passive facilitation and adopt a strategic interventionist role – ensuring support fosters engagement rather than complacency.
Originality/value
This study addresses the underexplored pre-adoption phase, shedding light on micro-level factors pertinent to emerging economies often marginalized in macro-focused studies. It introduces an ex ante perspective to the discourse on IFRS for SMEs’ adoption, contributing to the broader literature on accounting standard adoption in emerging markets and SMEs. It also refines existing DoI models by incorporating novel factors within the innovation and individual categories, thereby enhancing its applicability in similar settings.
Different factors have contributed to the development of financial accounting in Sweden over time. The decades around the mid-1900s were characterized by creditor protection and accounting prudence, low transparency, and political influence through tax and corporate governance systems. This phase culminated in the 1970s, as illustrated by the Nobes (1983, p. 7) classification where Sweden was assigned to a class of its own at one of the extreme positions (characterized by prudence, tax and government influence, flexibility in use of provisions, etc.). A differentiation gradually took place from the 1980s and onward, where different accounting systems emerged for different entities. Swedish multinationals began to cross-list in the United States, and US GAAP reconciliations pointed at the need for consolidated financial statements prepared in accordance with high-quality standards. Accordingly, the International Accounting Standards (IASs) were gradually translated in 1990–2002 and adopted into Swedish GAAP for listed groups, followed by mandatory IFRS adoption in 2005 as Sweden had become a member of the European Union in 1995. However, legal-entity accounting developed differently; major efforts were made to develop a Swedish version of IFRS for SMEs, and the resulting standard (K3) has been in force since 2014. In addition to requiring IFRS to be applied by listed companies, Sweden today (2022) has one accounting system for consolidated financial statements in privately held groups (K3-consolidated), one system for large limited-liability legal entities (K3-legal entity), one system for small limited-liability legal entities (K2), and one system for sole proprietorships (K1). There are links between financial accounting and tax in the legal entities, where smaller firms are expected to benefit from more tax-aligned financial accounting systems (K1 and K2).
