Impact of international financial reporting standards adoption on the perception of investors to invest in small-to-medium enterprise adopting transparency in disclosure policies

Arber Hoti () and Lulzim Krasniqi ()
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Arber Hoti: University of Prishtina “Hasan Prishtina”
Lulzim Krasniqi: University of Prishtina “Hasan Prishtina”

International Journal of System Assurance Engineering and Management, 2022, vol. 13, issue 1, No 52, 506-515

Abstract: Abstract This paper highlights how the use of IFRS as a common tool of accounting framework has emerged to be one of the most feasible methods of undertaking financial analysis of cross-border companies for investment in the SMEs. The aim of the paper is to understand how investors are inclined to invest in organizations that follow IFRS due to greater degree of transparency and accountability. The paper also evaluates how IFRS embracing influences the perception of investors towards small and medium enterprises (SMEs) and how they would be inclined to invest in companies which have adopted IFRS standards as this would help in proper disclosure of the policy and it in turn would also increase the goodwill of the organizations adopting these accounting policies. The study would evaluate how the adoption of IFRS would help in changing the perception of the investors and encourage them to invest with a greater degree of transparency. The study evaluates various literature articles and sources which help in understanding how IFRS ensures greater transparency through accountability and enhanced financial reporting. This paper also outlines the results which reveal how appropriate disclosure of financial statements by adoption of a common framework of accounting would help in retaining the trust of the investors and this in turn would attract a greater volume of investments as the influence of IFRS adoption to invest in SMEs mends the uniformity and clearness of financial reports, therefore sinking the international dissimilarities in recording standards by covering IFRS in SMEs and make provision in removing a cross border seizures and procurements by investors.

Keywords: SME (small-to-medium enterprise); IFRS (international financial reporting standards); GAAP (generally accepted accounting principles); Economic efficiency; Financial statements (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s13198-021-01501-4

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