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

  • Received March 15, 2023;
    Accepted April 28, 2023;
    Published May 8, 2023
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/imfi.20(2).2023.15
  • Article Info
    Volume 20 2023, Issue #2, pp. 171-181
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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.

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    • Table 1. Variables description
    • Table 2. Summary statistics
    • Table 3. Correlation matrix
    • Table 4. Variance Inflation Index (VIF) analysis
    • Table 5. Lewin-Lin ADF unit root test results
    • Table 6. Panel regression results (model 1)
    • Table 7. Panel regression results (model 2)
    • Conceptualization
      Nikhil M. N., Lithin B. M.
    • Data curation
      Nikhil M. N., Lithin B. M.
    • Formal Analysis
      Nikhil M. N., Suman Chakraborty, Lumen Shawn Lobo
    • Methodology
      Nikhil M. N., Suman Chakraborty, Lithin B. M.
    • Validation
      Nikhil M. N., Suman Chakraborty, Lithin B. M., Lumen Shawn Lobo
    • Visualization
      Nikhil M. N., Suman Chakraborty, Lumen Shawn Lobo
    • Writing – original draft
      Nikhil M. N., Lithin B. M.
    • Investigation
      Suman Chakraborty, Lumen Shawn Lobo
    • Project administration
      Suman Chakraborty, Lumen Shawn Lobo
    • Supervision
      Suman Chakraborty, Lumen Shawn Lobo
    • Writing – review & editing
      Suman Chakraborty, Lumen Shawn Lobo