Does transition to IFRS substantially affect key financial ratios in shareholder-oriented common law regimes? Evidence from the UK

Research output: Journal contributionsJournal articlesResearchpeer-review

Standard

Does transition to IFRS substantially affect key financial ratios in shareholder-oriented common law regimes? Evidence from the UK. / Lueg, Rainer; Punda, Pawel; Burkert, Michael.
In: Advances in Accounting, Vol. 30, No. 1, 2014, p. 241-250.

Research output: Journal contributionsJournal articlesResearchpeer-review

Harvard

APA

Vancouver

Bibtex

@article{dcb92f753db54189b5bad8a423797e8c,
title = "Does transition to IFRS substantially affect key financial ratios in shareholder-oriented common law regimes?: Evidence from the UK",
abstract = "This paper provides evidence of how a transition to IFRS affects key financial ratios and the pertinent financial statement items. Building on Lantto and Sahlstr{\"o}m's (2009) evidence from creditor-oriented code law regimes, we examine the impact of IFRS transition on listed companies in the shareholder-oriented common law regime of the UK. The study contributes two insights: First - despite their similarities - conversion from the UK General Accepted Accounting Principles (GAAP) to IFRS leads to substantial differences in key financial ratios. These even surpass differences reported by companies in creditor-oriented code law regimes. We find that medians of profitability ratios increased substantially: Operating Income Margin (OPM) increased by 10.8%, Return on Equity (ROE) by 27.0%, and Return on Invested Capital (ROIC) by 14.4%. The Current Ratio (CR) and Price-to-Earnings (P/E) Ratio also exhibit significant but less drastic changes of 4.2% and - 2.9%, respectively. Second, differences in shareholder-oriented common law regimes have the same causes as in creditor-oriented code law regimes, i.e., an increase in Operating Income, Net Income, Current Liabilities and Invested Capital, as well as a decrease in Shareholder Equity.",
keywords = "Code law, Common law, IFRS, Ratio, Reconciliation, Transition, UK GAAP, Management studies",
author = "Rainer Lueg and Pawel Punda and Michael Burkert",
year = "2014",
doi = "10.1016/j.adiac.2014.03.002",
language = "English",
volume = "30",
pages = "241--250",
journal = "Advances in Accounting",
issn = "0882-6110",
publisher = "Emerald Publishing",
number = "1",

}

RIS

TY - JOUR

T1 - Does transition to IFRS substantially affect key financial ratios in shareholder-oriented common law regimes?

T2 - Evidence from the UK

AU - Lueg, Rainer

AU - Punda, Pawel

AU - Burkert, Michael

PY - 2014

Y1 - 2014

N2 - This paper provides evidence of how a transition to IFRS affects key financial ratios and the pertinent financial statement items. Building on Lantto and Sahlström's (2009) evidence from creditor-oriented code law regimes, we examine the impact of IFRS transition on listed companies in the shareholder-oriented common law regime of the UK. The study contributes two insights: First - despite their similarities - conversion from the UK General Accepted Accounting Principles (GAAP) to IFRS leads to substantial differences in key financial ratios. These even surpass differences reported by companies in creditor-oriented code law regimes. We find that medians of profitability ratios increased substantially: Operating Income Margin (OPM) increased by 10.8%, Return on Equity (ROE) by 27.0%, and Return on Invested Capital (ROIC) by 14.4%. The Current Ratio (CR) and Price-to-Earnings (P/E) Ratio also exhibit significant but less drastic changes of 4.2% and - 2.9%, respectively. Second, differences in shareholder-oriented common law regimes have the same causes as in creditor-oriented code law regimes, i.e., an increase in Operating Income, Net Income, Current Liabilities and Invested Capital, as well as a decrease in Shareholder Equity.

AB - This paper provides evidence of how a transition to IFRS affects key financial ratios and the pertinent financial statement items. Building on Lantto and Sahlström's (2009) evidence from creditor-oriented code law regimes, we examine the impact of IFRS transition on listed companies in the shareholder-oriented common law regime of the UK. The study contributes two insights: First - despite their similarities - conversion from the UK General Accepted Accounting Principles (GAAP) to IFRS leads to substantial differences in key financial ratios. These even surpass differences reported by companies in creditor-oriented code law regimes. We find that medians of profitability ratios increased substantially: Operating Income Margin (OPM) increased by 10.8%, Return on Equity (ROE) by 27.0%, and Return on Invested Capital (ROIC) by 14.4%. The Current Ratio (CR) and Price-to-Earnings (P/E) Ratio also exhibit significant but less drastic changes of 4.2% and - 2.9%, respectively. Second, differences in shareholder-oriented common law regimes have the same causes as in creditor-oriented code law regimes, i.e., an increase in Operating Income, Net Income, Current Liabilities and Invested Capital, as well as a decrease in Shareholder Equity.

KW - Code law

KW - Common law

KW - IFRS

KW - Ratio

KW - Reconciliation

KW - Transition

KW - UK GAAP

KW - Management studies

UR - http://www.scopus.com/inward/record.url?scp=84901631396&partnerID=8YFLogxK

U2 - 10.1016/j.adiac.2014.03.002

DO - 10.1016/j.adiac.2014.03.002

M3 - Journal articles

AN - SCOPUS:84901631396

VL - 30

SP - 241

EP - 250

JO - Advances in Accounting

JF - Advances in Accounting

SN - 0882-6110

IS - 1

ER -

Recently viewed

Publications

  1. Eine internetbasierte Intervention zur Verbesserung des psychischen Wohlbefindens bei hochbelasteten Arbeitnehmern
  2. Personalpolitik in mittelständischen Unternehmen : personalpolitische Konfigurationen und organisationale Dissonanz
  3. Schwerpunktbereichsklausur – Vergaberecht: Nachprüfungsverfahren, Verfahrensablauf, Angebotswertung, Entscheidungsinhalt
  4. Fortentwicklung der Überwachungstätigkeit deutscher Banken-Aufsichtsräte durch die Reformen zur Corporate Governance
  5. Wie werden Nachhaltigkeitsinformationen gemanagt? Eine Exploration in führenden deutschen und britischen Unternehmen
  6. Texte lesen und verstehen, Lösungswege diskutieren: Das Schulbuch als zentrales Element mathematischen Kommunizierens?
  7. ››Was tun?›› # 5234766: Kunstpädagogik/Kunstvermittlung unter den Bedingungen des ökonomisierten Bildungswesen - 10 Splitter
  8. The influence of vertical integration and property rights on network access charges in the German electricity market
  9. Gemeinschaft in Bildern, jüdische Jugendbewegung und zionistische Erziehungspraxis in Deutschland und Palästina/Israel
  10. Konzeptionelle Äquivalenz von Kompetenzmessungen in den Naturwissenschaften zwischen NEPS, IQB-Ländervergleich und PISA
  11. Die Mitschrift: Funktionen und didaktische Überlegungen zur text- und wissensverarbeitenden Textform im Hochschulkontext
  12. "Gute" Aufgaben für die Arbeit mit Größen - Erkundungen zum Größenverständnis von Grundschulkindern als Ausgangsbasis
  13. Lehr- und Lernbedingungen in einigen Ländern der Bundesrepublik Deutschland im nationalen und internationalen Vergleich
  14. Schulleitungsmonitor Deutschland 2022 - Schulen in sozial benachteiligter und nicht benachteiligter Lage - Gesamtbericht
  15. Lern- und Leistungsschwierigkeiten im Mathematikunterricht aus der Sicht von Grundschullehrerinnen und Grundschullehrern