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Journal cover: Pacific Accounting Review

Pacific Accounting Review

ISSN: 0114-0582

Online from: 1997

Subject Area: Accounting and Finance

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IFRS in New Zealand: effects on financial statements and ratios


Document Information:
Title:IFRS in New Zealand: effects on financial statements and ratios
Author(s):Warwick Stent, (School of Accountancy, Massey University, Auckland, New Zealand), Michael Bradbury, (School of Accountancy, Massey University, Auckland, New Zealand), Jill Hooks, (School of Accountancy, Massey University, Auckland, New Zealand)
Citation:Warwick Stent, Michael Bradbury, Jill Hooks, (2010) "IFRS in New Zealand: effects on financial statements and ratios", Pacific Accounting Review, Vol. 22 Iss: 2, pp.92 - 107
Keywords:Financial reporting, International standards, Management ratios, New Zealand
Article type:Research paper
DOI:10.1108/01140581011074494 (Permanent URL)
Publisher:Emerald Group Publishing Limited
Acknowledgements:The authors would like to extend their thanks to participants at a Massey University research workshop, especially Asheq Rahman, for helpful suggestions. Warwick Stent gratefully acknowledges financial support from the New Zealand Institute of Chartered Accountants and the Accounting and Finance Association of Australia and New Zealand.
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.



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