The impact of IFRS adoption on the financial ratios of Norwegian public listed companies
1University of Oulu, Oulu Business School, Department of Accounting, Accounting
|Online Access:||PDF Full Text (PDF, 1 MB)|
|Persistent link:|| http://urn.fi/URN:NBN:fi:oulu-202005212135
Oulu : S. Kandimov,
|Publish Date:|| 2020-05-25
|Thesis type:||Master's thesis
The standards of accounting are critical in determining the quality of financial statements and the financial outcomes of a public listed company. Recently, many organisations have moved from the GAAP (Generally accepted accounting principles) accounting to the IFRS (International Financial Reporting Standards) accounting. The IFRS are more robust, transparent and informative compared to the GAAP, which differ from one country to another.
Therefore, the aim of this investigation was to identify the implications of IFRS application on the metrics that denote the financial position of publicly listed entities in Norway, such as, the profitability, liquidity, solvency and market ratios. The specific objectives investigated how the IFRS impacts the profitability, liquidity solvency and the market ratios of the Norwegian companies. The previous studies identified by literature review noted that the IFRS was positively correlated with the financial ratios.
This research applied the quantitative research design and examined 10 Norwegian companies. Data was collected from the annual reports and the financial statements of the publicly listed companies on NASDAQ. Correlation and regression tests were carried out to ascertain the impact that the application of the various IFRS standards had on financial ratios.
The study established that IFRS positively affected profitability and led to better liquidity outcomes. It also led to the attainment of better solvency ratios and better market ratios. The main strength of this study was that it attained all the research objectives. However, its limit was that its sole focus was on Norwegian companies hence generalisability of the findings to other companies outside of Norway was challenging.
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