Mandatory adoption of IFRS: Evidence from Turkey
Tucker, J., Yukselturk, O. and Misirlioglu, I. (2011) Mandatory adoption of IFRS: Evidence from Turkey. Under consideration for publication in The International Journal of Accounting. ISSN 0020-7063 [Submitted]
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Turkey adopted a set of financial reporting standards in compliance with International Financial Reporting Standards (IFRS) for listed companies on the Istanbul Stock Exchange (ISE) voluntarily from 2003 and mandatorily from 2005. This study focuses on the mandatory adoption of IFRS-based financial reporting standards and investigates the effects of IFRS-based standards on individual balance sheet items and net assets during the transition period. During this period, companies were required to bring their 2004 balance sheets in line with the new IFRS-based standards. The hypothesis of this paper is that the 2004 balance sheet figures and reported equity have significantly changed with the adoption of the IFRS-based standards. The results revealed that there were no significant changes in the reported equity of companies, but that there were substantial differences in certain balance sheet figures, mainly due to reclassification. There was no clear evidence that balance sheet accounts were fully re-measured under the provisions of the new standards. Our findings show that transition only gave rise to the reclassification of certain balance sheet items rather than in improvements in measurement, implying that whilst international convergence occurred successfully in accounting standards, it was not always the case in financial reporting practice. This paper also provides a useful insight into the mandatory harmonisation of accounting in an emerging market.
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