Impact of IFRS Adoption of Firm Performance of Listed Non-Financial Firms of Pakistan
DOI:
https://doi.org/10.62270/jirms.vi.26Keywords:
Pre-IFRS Adoption, Post-IFRS Adoption, Firm PerformanceAbstract
Purpose: The purpose of the study is twofold, initially examining the effect of IFRS adoption on a firm’s financial performance and secondly, whether there is a difference in pre-IFRS adoption and post-IFRS adoption period with reference to firm performance. In this regard, this study illustrated the empirical evidence of the influence of a set of accounting standards adopted by the regulators of Pakistan in 2018 on the firm’s performance.
Study Design/Methodology/Approach: Data from listed non-financial firms are collected for the period from 2016 to 2017 and from 2019 to 2020. The period of 2016 and 2017 is taken as a pre-IFRS adoption period while the period of 2019 and 2020 is taken as a post-IFRS adoption period.
Findings: The findings of the study reveals that there is a substantial positive impact of IFRS adoption on ROA while there is an insignificant but negative impact of IFRS adoption on ROE. In addition, the findings reveal that there is a substantial difference between the pre-and post-IFRS adoption period with respect to firm performance (ROA). Based on the outcomes, the study reveals prospective caveats. Initially, the reported link between IFRS convergence and firms’ profitability is because of IFRS adoption. Moreover, the improved performance may be because of high-quality standards. Originality/Value: The current study is the first to focus on links between IFRS adaptation and the performance of non-financial firms in Pakistan. This article enhanced the understanding of the role that IFRS adaption plays in the performance of non-financial firms.
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