[The Impact of IFRS on Organization]

By

Acknowledgement

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I, [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University (Alford, 1993,, 183).

Signed __________________ Date _________________

Abstract

The globalisation of international financial markets has increased the need for world-wide comparable accounting standards and regulation. The required implementation of International Financial Reporting Standards (IFRS) by listed firms that operate in member-states of the European Union, as of January 1, 2005, should assist investors in their decision-making and enhance stock market efficiency. At the same time, the world-wide acceptance of IFRS may indicate their high quality. The International Accounting Standards Board (IASB) acquired greater legitimacy and stature when the European Union (EU) decided to require all listed companies to prepare consolidated accounts based on International Financial Reporting Standards (IFRS) beginning in 2005. This study examines the progress and perceived impediments to convergence in European countries directly affected by the EU's decision. We utilize data from a final Sample size of 546 UK firms and 952 continental European firms. Additionally, we analyze subsequent events and studies.

While all surveyed countries will either require or effectively allow listed companies to prepare consolidated financial statements in accordance with IFRS by 2005, few are expected to require IFRS for non-listed companies.

Firms listed on stock exchanges within the European Economic Area are required to report consolidated financial statements according to International Financial Reporting Standards (IFRS) since 2005. The firms that adopted IFRS in 2005 were also required to restate their 2004 financial statements from national GAAP to provide comparable accounting figures.This suggests the development of a "two-standard" system. The two most significant impediments to convergence identified by the survey appear to be the complicated nature of particular IFRS (including financial instruments) and the tax-orientation of many national accounting systems. Other barriers to convergence include underdeveloped national capital markets, insufficient guidance on first-time application of IFRS, and limited experience with certain types of transactions.

Table of Contents

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

CHAPTER 1: INTRODUCTION7

Usefulness8

Relevance9

Research Question and Sub-Questions10

CHAPTER 2: LITERATURE REVIEW12

IFRS Adoption in the E.U: Key Institutional Facts12

Motivation for Type of Accounting Conservatism14

Measuring Earnings Conservatism14

Asymmetric Timeliness Measure15

Skewness of Earnings Measure15

Motivation for Primary Measure of Earnings Conservatism17

Earnings Conservatism in Prior Research17

Earnings Conservatism in the UK and Continental Europe from Prior Research18

International Financial Reporting Standards19

International Financial Reporting as a Global Standard19

International Financial Reporting Standards and Conservatism20

Accounting Conservatism and IFRS in Prior Research20

CHAPTER 3: METHODOLOGY24

Research Approach24

Market-based Accounting Research24

Positive Accounting Theory24

Hypothesis Development and Hypotheses25

Earnings Conservatism in the UK and Continental Europe from 2002 through 2007; Hypothesis 126

Earnings Conservatism in the Pre-Adoption Period; Hypothesis 227

Earnings Conservatism in the Post-Adoption Period; Hypothesis 327

Research Design28

Data Description28

Testing Hypotheses 2 and 332

CHAPTER 4: STATISTICAL RESULTS35

Skewness of Earnings Measure Results - Hypothesis 135

Asymmetric Timeliness of Earnings Measure Results ...