An empirical examination of IFRS impact for European and non-European countries

This study has used Gray’s comparability index to investigate the impact of IFRS adoption on company financial position and performance for Germany, France, South Africa and Israel. It assessed how IFRS-based financial numbers change in comparison with local GAAP for European and non-European countries. The study also focused on how IFRS implementation affects market value and book value relevance. The examination of the comparability indices has shown that, unlike Israel, European and South African companies experienced a positive change in equity and earnings. Israeli companies displayed a positive change in leverage. European and Israeli companies displayed a negative change in liquidity. The regression analysis has found that European companies displayed higher leverage and earnings. Non-European companies exhibited higher equity and liquidity. The findings of this study confirm that the value relevance of reported financial information is likely to be significantly different between local GAAP and IF...