IFRS in New Zealand: effects on financial statements and ratios
Abstract
Purpose
The purpose of this paper is to examine the financial statement impacts of adopting NZ IFRS during 2005 through 2008.
Design/methodology/approach
The effects of NZ IFRS on the financial statements and ratios of first‐time adopters of NZ IFRS for a stratified random sample of 56 listed companies is analysed. In total, 16 of these were early adopters and 40 of which waited until adoption of NZ IFRS became mandatory. The analysis of the financial statement impact of NZ IFRS is conducted in the context of the accounting choice literature.
Findings
The results show that 87 per cent of firms are affected by NZ IFRS. The median and inter‐quartile ranges indicate that for most firms the impact of NZ IFRS is small. However, the maximum and minimum values indicate the impact can be large for some entities. The impact has considerable effects on common financial ratios.
Research limitations/implications
The usual limitations applicable to small samples apply.
Practical implications
The findings may be useful to regulators and policy makers reviewing financial reporting requirements.
Originality/value
This study is the first to offer a comprehensive empirical analysis of the effect of adopting IFRS on financial statements in New Zealand, as well as on selected key ratios of interest to financial analysts. The data used are more recent than most IAS or IFRS studies around the world and are stratified to allow for comparison between voluntary/early adopters and mandatory/late adopters.
Keywords
Citation
Stent, W., Bradbury, M. and Hooks, J. (2010), "IFRS in New Zealand: effects on financial statements and ratios", Pacific Accounting Review, Vol. 22 No. 2, pp. 92-107. https://doi.org/10.1108/01140581011074494
Publisher
:Emerald Group Publishing Limited
Copyright © 2010, Emerald Group Publishing Limited