Review of IFRS consequences in Europe: An enforcement perspective

Figures & data

Table 1. List of sample papers

Author(s)	Countries studied	Paper	Journal	Findings
Aharony et al. (2010)	14 European Countries	The Impact of Mandatory IFRS Adoption on Equity Valuation of Accounting Numbers for Security Investors in the EU	European Accounting Review	Value relevance increased
Ahmed et al. (2013)	35 Countries (16 European)	Does Mandatory Adoption of IFRS Improve Accounting Quality?	Contemporary Accounting Research	Earnings transparency has decreased with this being more evident in countries with stronger enforcement
Armstrong et al. (2010)	18 European Countries	Market Reaction to the Adoption of IFRS in Europe	The Accounting Review	Positive market reaction for firms
Bischof (2009)	28 European Countries	The Effects of IFRS 7 Adoption on Bank Disclosure in Europe	Accounting in Europe	Quality of accounting information increased
Byard et al. (2011)	20 European Countries	The Effect of Mandatory IFRS Adoption on Financial Analysts’ Information Environment	Journal of Accounting Research	Analysts’ information quality increased but only in with large differences between IFRS and local GAAP and with strong enforcement environments
Callao and Jarne (2010)	11 European Countries	Have IFRS Affected Earnings Management in the European Union	Accounting in Europe	Earnings transparency decreased
Cascino and Gassen (2015)	14 Countries (10 European)	What Drives the Comparability Effect of Mandatory IFRS Adoption?	Review of Accounting Studies	Marginal increase in comparability. High compliance incentive firms experience increased comparability
Chen et al. (2010)	15 European Countries	The Role of International Financial Reporting Standards in Accounting Quality: Evidence from the European Union	Journal of International Financial Management & Accounting	FDI increased
Christensen et al. (2013)	35 Countries (22 European)	Mandatory IFRS reporting and changes in enforcement	Journal of Accounting and Economics	Increased liquidity only evident in countries that had substantive changes in its reporting environment
Daske et al. (2013)	51 Countries (Global)	Adopting a Label: Heterogeneity in the Economic Consequences Around IAS/IFRS Adoptions	Journal of Accounting Research	Share liquidity increase
DeFond et al. (2011)	24 Countries (14 European)	The impact of mandatory IFRS adoption on foreign mutual fund ownership: The role of comparability	Journal of Accounting and Economics	Mutual funds increased investment in cross-border firms
Florou and Pope (2012)	45 Countries (18 European)	Mandatory IFRS adoption and institutional investment decisions	The Accounting Review	Increased equity investments by institutional investors
Horton et al. (2013)	46 Countries (20 European)	Does Mandatory IFRS Adoption Improve the Information Environment?	Contemporary Accounting Research	Analysts’ information quality increased
Khlif and Achek (2016)	Global including European	IFRS adoption and auditing: a review	Asian Review of Accounting	Increased audit fees. Increased auditor switching
Kim et al. (2012)	17 Countries (14 European)	The Impact of Mandatory IFRS Adoption on Audit Fees: Theory and Evidence	The Accounting Review	Audit fee increased
Li (2010)	18 European Countries	Does Mandatory Adoption of International Financial Reporting Standards in the European Union Reduce the Cost of Equity Capital?	The Accounting Review	Cost of equity decreased
Ozkan et al. (2012)	16 Countries (15 European)	Mandatory IFRS Adoption and the Contractual Usefulness of Accounting Information in Executive Compensation	Journal of Accounting Research	Increased accounting quality and comparability
Wang (2014)	69 Countries (29 European)	Accounting Standards Harmonization and Financial Statement Comparability: Evidence	Journal of Accounting Research	Comparability is increased
Wieczynska (2016)	5 European Countries	The “Big” Consequences of IFRS: How and When Does the Adoption of IFRS BEnefit Global Accounting Firms	The Accounting Review	Likelihood of changing to global audit firm increased in year of IFRS adoption. More likely in strong enforcement countries
Yip and Young (2012)	17 European Countries	Does Mandatory IFRS Adoption Improve Information Comparability?	The Accounting Review	Earnings comparability and value relevance increased
Yu and Wahid (2014)	52 Countries (21 European)	Accounting Standards and International Portfolio Holdings	The Accounting Review	Global mutual funds increase investment when accounting distance is reduce (IFRS is adopted)
Brochet et al. (2013)	UK	Mandatory IFRS Adoption and Financial Statement Comparability	Contemporary Accounting Research	Comparability increased. Information assymetry decreased
El Guindy and Trabelsi (2020)	UK	IFRS adoption/reporting and auditor fees: the conditional effect of audit firm size and tenure	International Journal of Accounting & Information Management	Increased audit and non-audit fees
Iatridis (2012)	UK	Hedging and earnings management in the light of IFRS implementation: Evidence from the UK stock market	The British Accounting Review	Earnings management decreased
Iatridis (2012)	UK	Voluntary IFRS disclosures: evidence from the transition from UK GAAP to IFRSs	Managerial Auditing Journal	Value relevance and information assymetry increased
Bassemir (2018)	Germany	Why do private firms adopt IFRS?	Accounting and Business Research	Characteristics: more growth opportunities, more leveraged, externally rated, need financing, international, global auditor
Brüggemann et al. (2013)	Germany	Intended and Unintended Consequences of Mandatory IFRS Adoption: A Review of Extant Evidence and Suggestions for Future Research	European Accounting Review	Increased investment
Christensen et al. (2015)	Germany	Incentives or Standards: What Determines Accounting Quality Changes around IFRS Adoption?	European Accounting Review	No increase in value relevance
Ernstberger et al. (2012)	Germany	Economic Consequences of Accounting Enforcement Reforms: The Case of Germany	European Accounting Review	Decrease earnings management, increased share liquidity, increased share price (lesser extent)
Hitz et al. (2012)	Germany	Enforcement of Accounting Standards in Europe: Capital-Market-Based Evidence for the Two-Tier Mechanism in Germany	European Accounting Review	Negative market reaction to non-compliance with IFRS
Kim and Lin (2019)	Germany	Accrual anomaly and mandatory adoption of IFRS: Evidence from Germany	Advances in Accounting	Increased forecast accuracy. Decreased forecast dispersion. Decreased earnings management
De Fuentes and Sierra-Grau (2015)	Spain	IFRS adoption and audit and non-audit fees: empirical evidence from Spanish listed companies	Spanish Journal of Finance and Accounting	Increased audit fees
Fitó et al. (2012)	Spain	Choices in IFRS Adoption in Spain: Determinants and Consequences	Accouting in Europe	Characteristics: larger firms and growth opportunities
Garrido-Miralles and Sanabria-García (2014)	Spain	The impact of mandatory IFRS adoption on financial analysts’ earnings forecasts in Spain	Spanish Journal of Finance and Accounting	Accuracy of analysts’ forecasts increased. Dispersion of in analysts’ forecasts decreased
Gastón et al. (2010)	Spain and UK	IFRS adoption in Spain and the United Kingdom: Effects on accounting numbers and relevance	Advances in Accounting	Value relevance decreased
Garrido-Miralles and Sanabria-García (2014)	Spain	Impact of IFRS: evidence from Spanish listed companies	International Journal of Accounting	Significant changes in accounting information
Sanabria-García and Garrido-Miralles (2020)	Spain	Impact of IFRS on non-cross-listed Spanish companies: Financial analysts and volume of trade	European Research on Management and Business Economics	Analysts’ forecasts accuracy increased
Cordazzo & Rossi (2020)	Italy	The influence of IFRS mandatory adoption on value relevance of intangible assets in Italy	Journal of Applied Accounting	Mixed value relevance
Cordazzo (2013)	Italy	The impact of IFRS on net income and equity: evidence from Italian listed companies	Journal of Applied Accounting	Increased value relevance
Di Fabio (2018)	Italy	Voluntary application of IFRS by unlisted companies: evidence from the Italian context	International Journal of Disclosure and Governance	Characteristics: more leveraged, size, foreign ownership, asset growth, capital intensity
Palea (2014)	Italy	Are IFRS value-relevant for separate financial statements? Evidence from the Italian stock market	Journal of International Accounting, Auditing and Taxation	Value Relevance is not increased

Figure 1. Number of papers per country.

Figure 2. Number of papers per theme.

Table 2. Comparison among the sample countries on themes

Country	Accounting quality	Comparability	Audit fees	Investment
United Kingdom	Increase	Increase	Increase
Germany	Increase	Increase		Increase
Spain	No effect		Increase
Italy	Mixed effect	No effect		Increase

Aharony, J., Barniv, R., & Falk, H. (2010). The impact of mandatory IFRS adoption on equity valuation of accounting numbers for security investors in the EU. European Accounting Review, 19(3), 535–19. https://doi.org/10.1080/09638180.2010.506285

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Ahmed, K., Chalmers, K., & Khlif, H. (2013). A meta-analysis of IFRS adoption effects. The International Journal of Accounting, 48(2), 173–217. https://doi.org/10.1016/j.intacc.2013.04.002

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Armstrong, C. S., Barth, M. E., Jagolinzer, A. D., & Riedl, E. J. (2010). Market Reaction to the Adoption of IFRS in Europe. The Accounting Review, 85(1), 31–61.

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Bischof, J. (2009). The effects of IFRS 7 adoption on bank disclosure in Europe. Accounting in Europe, 6(2), 167–194. https://doi.org/10.1080/17449480903171988

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Byard, D., Li, Y., & Yu, Y. (2011). The effect of mandatory IFRS adoption on financial analysts. Information Environment. Journal of Accounting Research, 49(1), 69–96.

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Callao, S., & Jarne, J. I. (2010). Have IFRS affected earnings management in the European Union? Accounting in Europe, 7(2), 159–189. https://doi.org/10.1080/17449480.2010.511896

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Cascino, S., & Gassen, J. (2015). What drives the comparability effect of mandatory IFRS adoption? Review of Accounting Studies, 20(1), 242–282. https://doi.org/10.1007/s11142-014-9296-5

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Chen, H., Tang, Q., Jiang, Y., & Lin, Z. (2010). The role of international financial reporting standards in accounting quality: Evidence from the European Union. Journal of International Financial Management & Accounting, 21(3), 220–278. https://doi.org/10.1111/j.1467-646X.2010.01041.x

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Christensen, H. B., Hail, L., & Leuz, C. (2013). Mandatory IFRS reporting and changes in enforcement. Journal of Accounting and Economics, 56(2, Suppl. 1), 147–177.

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Daske, H., Hail, L., Leuz, C., & Verdi, R. (2013). Adopting a Label: Heterogeneity in the economic consequences around IAS/IFRS adoptions. Journal of Accounting Research, 51(3), 495–547. https://doi.org/10.1111/1475-679X.12005

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DeFond, M., Hu, X., Hung, M., & Li, S. (2011). The impact of mandatory IFRS adoption on foreign mutual fund ownership: The role of comparability. Journal of Accounting and Economics, 51(3), 240–258. https://doi.org/10.1016/j.jacceco.2011.02.001

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Florou, A., & Pope, P. F. (2012). Mandatory IFRS adoption and institutional investment decisions. The Accounting Review, 87(6), 1993–2025. https://doi.org/10.2308/accr-50225

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Horton, J., Serafeim, G., & Serafeim, I. (2013). Does mandatory IFRS adoption improve the information environment?*. Contemporary Accounting Research, 30(1), 388–423. https://doi.org/10.1111/j.1911-3846.2012.01159.x

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Khlif, H., & Achek, I. (2016). IFRS adoption and auditing: A review. Asian Review of Accounting, 24(3), 338–361. https://doi.org/10.1108/ARA-12-2014-0126

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Kim, J.-B., Liu, X., & Zheng, L. (2012). The impact of mandatory IFRS adoption on audit fees: theory and evidence. The Accounting Review, 87(6), 2061–2094. https://doi.org/10.2308/accr-50223

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Li, S. (2010). Does mandatory adoption of international financial reporting standards in the European Union reduce the cost of equity capital? The Accounting Review, 85(2), 607–636. https://doi.org/10.2308/accr.2010.85.2.607

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Ozkan, N., Singer, Z., & You, H. (2012). Mandatory IFRS adoption and the contractual usefulness of accounting information in executive compensation. Journal of Accounting Research, 50(4), 1077–1107. https://doi.org/10.1111/j.1475-679X.2012.00453.x

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Wang, C. (2014). Accounting standards harmonisation and financial statement comparability: Evidence from transnational information transfer. Journal of Accounting Research, 52(4), 955–992.

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Wieczynska, M. (2016). The “Big” Consequences of IFRS: How and when does the adoption of IFRS benefit global accounting firms? The Accounting Review, 91(4), 1257–1283. https://doi.org/10.2308/accr-51340

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Yip, R. W. Y., & Young, D. (2012). Does mandatory IFRS adoption improve information comparability? The Accounting Review, 87(5), 1767–1789. https://doi.org/10.2308/accr-50192

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Yu, G., & Wahid, A. S. (2014). Accounting standards and international portfolio holdings. The Accounting Review, 89(5), 1895–1930. https://doi.org/10.2308/accr-50801

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Brochet, F., Jagolinzer, A. D., & Riedl, E. J. (2013). Mandatory IFRS adoption and financial statement comparability. Contemporary Accounting Research, 30(4), 1373–1400.

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El Guindy, M. N., & Trabelsi, N. S. (2020). IFRS adoption/reporting and auditor fees: The conditional effect of audit firm size and tenure. International Journal of Accounting & Information Management, 28(4), 639–666. https://doi.org/10.1108/IJAIM-09-2019-0107

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Iatridis, G. (2012). Hedging and earnings management in the light of IFRS implementation: Evidence from the UK stock market. The British Accounting Review, 44(1), 21–35. https://doi.org/10.1016/j.bar.2011.12.002

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Bassemir, M. (2018). Why do private firms adopt IFRS? Accounting and Business Research, 48(3), 237–263. https://doi.org/10.1080/00014788.2017.1357459

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Brüggemann, U., Hitz, J.-M., & Sellhorn, T. (2013). Intended and unintended consequences of mandatory IFRS adoption: A review of extant evidence and suggestions for future Research. European Accounting Review, 22(1), 1–37. https://doi.org/10.1080/09638180.2012.718487

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Christensen, H. B., Lee, E., Walker, M., & Zeng, C. (2015). Incentives or standards: What determines accounting quality changes around IFRS adoption? European Accounting Review, 24(1), 31–61. https://doi.org/10.1080/09638180.2015.1009144

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Ernstberger, J., Stich, M., & Vogler, O. (2012). Economic consequences of accounting enforcement reforms: The case of Germany. European Accounting Review, 21(2), 217–251. https://doi.org/10.1080/09638180.2011.628096

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Hitz, J.-M., Ernstberger, J., & Stich, M. (2012). Enforcement of accounting standards in Europe: Capital-market-based evidence for the two-tier mechanism in Germany. European Accounting Review, 21(2), 253–281. https://doi.org/10.1080/09638180.2011.641727

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Kim, J. H., & Lin, S. (2019). Accrual anomaly and mandatory adoption of IFRS: Evidence from Germany. Advances in Accounting, 47, 100445. https://doi.org/10.1016/j.adiac.2019.100445

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de Fuentes, C., & Sierra-Grau, E. (2015). IFRS adoption and audit and non-audit fees: Empirical evidence from Spanish listed companies. Spanish Journal of Finance and Accounting/Revista Española de Financiación Y Contabilidad, 44(4), 387–426.

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Fitó, A., Gómez, F., & Moya, S. (2012). Choices in IFRS Adoption in Spain: Determinants and Consequences. Accounting in Europe, 9(1), 61–83. https://doi.org/10.1080/17449480.2012.664390

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Garrido-Miralles, P., & Sanabria-García, S. (2014). The impact of mandatory IFRS adoption on financial analysts’ earnings forecasts in Spain/El efecto de la aplicación obligatoria de las IFRS sobre los pronósticos de los analistas financieros en ESPAÑA. Revista Española de Financiación y Contabilidad, 43(2), 111–131. https://doi.org/10.1080/02102412.2014.911587

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Gastón, S. C., García, C. F., Jarne, J. I. J., & Laínez Gadea, J. A. (2010). IFRS adoption in Spain and the United Kingdom: Effects on accounting numbers and relevance. Advances in Accounting, 26(2), 304–313. https://doi.org/10.1016/j.adiac.2010.08.003

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Sanabria-García, S., & Garrido-Miralles, P. (2020). Impact of IFRS on non-cross-listed Spanish companies: Financial analysts and volume of trade. European Research on Management and Business Economics, 26(2), 78–86. https://doi.org/10.1016/j.iedeen.2020.04.001

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Cordazzo, M., & Rossi, P. (2020). The influence of IFRS mandatory adoption on value relevance of intangible assets in Italy. Journal of Applied Accounting Research, 21(3), 415–436. https://doi.org/10.1108/JAAR-05-2018-0069

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Cordazzo, M. (2013). The impact of IFRS on net income and equity: Evidence from Italian listed companies. Journal of Applied Accounting Research, 14(1), 54–73. https://doi.org/10.1108/09675421311282540

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DiFabio, C. (2018). Voluntary application of IFRS by unlisted companies: Evidence from the Italian context. International Journal of Disclosure and Governance, 15(2), 73–86. https://doi.org/10.1057/s41310-018-0037-z

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Palea, V. (2014). Are IFRS value-relevant for separate financial statements? Evidence from the Italian stock market. Journal of International Accounting, Auditing and Taxation, 23(1), 1–17. https://doi.org/10.1016/j.intaccaudtax.2014.02.002

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