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Adoption of IFRS in an emerging market: the Chilean case

Adoption of IFRS in an emerging market: the Chilean case PurposeThe purpose of this paper is to analyze the impact triggered by adopting International Financial Reporting Standards (IFRS) in South America. In order to do this, the case of Chile is considered, as it was the first country in the region to adopt IFRS in full form from 2009.Design/methodology/approachThe authors analyze a sample of 43 Chilean companies. The analysis has two stages. First, the authors analyze if the adoption of IFRS in Chile produced a statistically significant change in the main financial indicators. Then, the authors analyze the market reaction to the announcement of the adoption and implementation of IFRS, by doing an event study.FindingsThe authors found that adopting IFRS in Chile produced a statistically significant change in the main financial indicators, except for in leverage and Price-Earnings Ratios. As for the main accounts of the financial statements, the authors found significant differences, with the exception of inventories and current assets. However, after assessing the market reaction to the announcement of the adoption and implementation of IFRS, by studying the events, the authors report neither reward nor punishment by the market.Originality/valueThis paper pioneers the analysis of the impact triggered by adopting IFRS in South America. The authors results apply not only to Chile but also to a number of South American countries since many of these countries share similar characteristics with Chile. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Academia Revista Latinoamericana de Administración Emerald Publishing

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References (29)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1012-8255
DOI
10.1108/ARLA-11-2014-0191
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to analyze the impact triggered by adopting International Financial Reporting Standards (IFRS) in South America. In order to do this, the case of Chile is considered, as it was the first country in the region to adopt IFRS in full form from 2009.Design/methodology/approachThe authors analyze a sample of 43 Chilean companies. The analysis has two stages. First, the authors analyze if the adoption of IFRS in Chile produced a statistically significant change in the main financial indicators. Then, the authors analyze the market reaction to the announcement of the adoption and implementation of IFRS, by doing an event study.FindingsThe authors found that adopting IFRS in Chile produced a statistically significant change in the main financial indicators, except for in leverage and Price-Earnings Ratios. As for the main accounts of the financial statements, the authors found significant differences, with the exception of inventories and current assets. However, after assessing the market reaction to the announcement of the adoption and implementation of IFRS, by studying the events, the authors report neither reward nor punishment by the market.Originality/valueThis paper pioneers the analysis of the impact triggered by adopting IFRS in South America. The authors results apply not only to Chile but also to a number of South American countries since many of these countries share similar characteristics with Chile.

Journal

Academia Revista Latinoamericana de AdministraciónEmerald Publishing

Published: Nov 2, 2015

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