A Study of Impact of IFRS Convergence in India on Debt–Equity Components of Financial Statements

Author:

Jain Saumya1ORCID,Gupta Chandra Prakash2

Affiliation:

1. Assistant Professor, Shaheed Sukhdev College of Business Studies, University of Delhi, India.

2. Professor, Department of Financial Studies, South Campus, University of Delhi, India.

Abstract

The present article analyses the impact of International Financial Reporting Standards (IFRS) convergence on financial statements in India. Our focus is on the most significant and challenging standard, that is, IND-AS (financial instruments). Our focus is on the most significant and challenging standard i.e IND-AS(Financial Instruments) and their impact on debt-equity classification brought about by the new standard(s). We analyse the annual reports of 30 listed entities having outstanding preference share capital for the years 2015–2016 and 2016–2017. We redefine the formulae of ratios most commonly used in loan agreements (popularly referred to as ‘debt covenants’) from lenders’ perspective and empirically examine the impact of IFRS convergence on the value of these ratios for the same financial year, that is, 2015–2016. Our results show that there is a significant difference in the value of ratios calculated using newly developed formulae and by applying the old formulae on new data. The study is the first of its kind to empirically examine the impact of IND-AS specifically standard relating to financial instruments on debt ratios in India. Our contribution to the literature is that we not only examine the impact on ratios on transition to IND-AS but also offer a solution as to how the users can mitigate this impact by making adjustments to the debt ratios taking into account the recognition, measurement and presentation changes brought about by IND-AS, so that they can apply our newly developed formulae directly on IND-AS statements and derive the same meaning and interpretation from the ratios as before retaining their practical usage. Thus, our study is of immediate practical relevance to lenders, credit managers and investors aiding their decision making.

Publisher

SAGE Publications

Subject

Business and International Management

Cited by 4 articles. 订阅此论文施引文献 订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献

1. The impact of board gender diversity on firm performance: does critical mass matter?;Journal of Applied Accounting Research;2024-07-26

2. Does the Ind AS moderate the relationship between capital structure and firm performance?;Journal of Corporate Accounting & Finance;2023-11-08

3. Asymmetric financial reporting quality and firm size: conditional evidence from an emerging market;Journal of Applied Accounting Research;2021-12-27

4. Accounting constructs and economic consequences of IFRS adoption in India;Journal of International Accounting, Auditing and Taxation;2021-12

同舟云学术

1.学者识别学者识别

2.学术分析学术分析

3.人才评估人才评估

"同舟云学术"是以全球学者为主线,采集、加工和组织学术论文而形成的新型学术文献查询和分析系统,可以对全球学者进行文献检索和人才价值评估。用户可以通过关注某些学科领域的顶尖人物而持续追踪该领域的学科进展和研究前沿。经过近期的数据扩容,当前同舟云学术共收录了国内外主流学术期刊6万余种,收集的期刊论文及会议论文总量共计约1.5亿篇,并以每天添加12000余篇中外论文的速度递增。我们也可以为用户提供个性化、定制化的学者数据。欢迎来电咨询!咨询电话:010-8811{复制后删除}0370

www.globalauthorid.com

TOP

Copyright © 2019-2024 北京同舟云网络信息技术有限公司
京公网安备11010802033243号  京ICP备18003416号-3