Are IFRS Standards a ‘trusted’ language for private firm credit decisions? An analysis of country differences in users’ perspective

Ann Jorissen, Ronita Ram and Pedro Moraya Barros

Accounting and Finance, 2022, vol. 62, issue 2, 3021-3065

Abstract: This paper studies whether creditors trust and use IFRS‐based information in the context of private firm loan decisions. Through an institutional theory lens, and based on information collected from 108 bankers, we find that IFRS numbers are more trusted and used than local‐GAAP (non‐IFRS Standards‐based) numbers. Differences in countries’ formal and informal institutions are related to observed cross‐country differences in trust and use of financial information. We also find that mandatory IFRS Standards adoption in a country is associated with higher use of these numbers than when countries permit the adoption of IFRS Standards.

Date: 2022
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https://doi.org/10.1111/acfi.12949

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