Impact of IFRS in Europe - evidence so far: An evening discussion

IFRS adoption and the cost of equity capital in Europe

When International Financial Reporting Standards (IFRS) were required to be used by all European listed companies from 2005, one of the key arguments being used to justify this, was that the better more comparable financial information from IFRS would improve investment analysis and investors’ decision-making. They would be better able to discriminate between companies, understand their results and reduce uncertainty and this would lead to better pricing of capital and an overall reduction in its cost.

ACCA commissioned experts in the field from the University of Manchester to see whether this anticipated effect has shown through. The results show that there have already been significant effects, that they are not uniform across Europe, and the variation is not in the direction which some expected. The major positive effects are in those countries, such as the UK, where an equity investor-friendly environment already exists.

The research findings we think have significance to companies everywhere in terms of the business benefits of the adoption of global standards, but also to regulators who are wanting to improve the functioning of capital markets. The findings come at an important time when countries outside Europe, for example the USA and India, are considering following its lead on IFRS.

We would like to invite you to come to an evening discussion where the research report will be launched. Dr Edward Lee and Professor Martin Walker will present their findings. Professor Mary Barth, a member of the International Accounting Standards Board, will be giving her reactions to it. The event will be followed by a drinks reception from 7.45pm until 8.45pm to provide an opportunity for futher discussion.