Does the adoption of Ind AS affect the performance of firms in India?

Nikhil M N, Suman Chakraborty, Lithin B M and Lumen Shawn Lobo

MPRA Paper from University Library of Munich, Germany

Abstract: The increasing prevalence of IFRS adoption has resulted in enhanced transparency, accounting quality, and comparability of financial information among firms, especially in emerging markets worldwide, including India. Nonetheless, the question of whether the adoption of IFRS has led to improved firm performance persists. To address this question, this study examines the impact of transitioning from India’s GAAP-based accounting standards to IFRS-converged standards (Ind AS) on non-financial firms’ performance from 2013 to 2022. The empirical findings reveal that the convergence of Indian accounting standards with IFRS significantly improves firm performance, as demonstrated by a positive coefficient of 0.0166 for Ind AS in the fixed-effect model. The study also validates the original empirical findings using the return on equity (ROE) measure of firm performance, which yielded a coefficient of 0.0197, further confirming that the adoption of Ind AS leads to an increase in the performance of Indian firms. These results contribute new insights to the existing IFRS literature and have implications for policymakers and managers.

Keywords: emerging market; firm profitability; fixed effect model; IFRS convergence; Nifty 500; panel data; return on assets (search for similar items in EconPapers)
JEL-codes: C33 G32 M41 M48 (search for similar items in EconPapers)
Date: 2023-03-15, Revised 2023-04-18
New Economics Papers: this item is included in nep-acc, nep-des, nep-eff and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in Investment Management and Financial Innovations 2.20(2023): pp. 171-181

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