Transition of Hungarian Companies to IFRS-based Reporting in Relation to Indicators Used in Credit Approval

Eleonora Tarpataki (), Janka Filyo () and Norbert Laszlo ()
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Janka Filyo: Corvinus University of Budapest
Norbert Laszlo: Corvinus University of Budapest

Financial and Economic Review, 2022, vol. 21, issue 1, 95-112

Abstract: Legal requirements and opportunities are prompting more and more Hungarian companies to prepare their financial statements in accordance with International Financial Reporting Standards (IFRS). In our study, we examine the impact of transition using typical indicators that are frequently included in financial institutions' rating criteria. We compared the balance sheet, P/L account and cash flow data of 42 companies operating in different industries, as reported in their statements prepared in accordance with Hungarian and international regulations, and concluded that although there may be significant variations at an individual level, this is not the case in terms of the median of the aggregate data. Although the introduction of the European Single Electronic Format (ESEF), which allows for uniform interpretation and automatic processing of financial statements, has also been postponed for one year in Hungary due to the pandemic, it will open new perspectives for the development of rating systems, requiring preparations by credit institutions.

Keywords: IFRS transition; rating; indicators; ESEF (search for similar items in EconPapers)
JEL-codes: C21 G21 G32 M41 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:mnb:finrev:v:21:y:2022:i:1:p:95-112

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