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Are IFRS Standards a “trusted” language for private firm credit decisions? An analysis of country differences in users’ perspectives

Jorissen, A., Ram, R. and Barros, P. (2022) Are IFRS Standards a “trusted” language for private firm credit decisions? An analysis of country differences in users’ perspectives. Accounting and Finance. ISSN 1467-629X (In Press)

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Abstract/Summary

This paper studies whether creditors trust and use IFRS-based information for decision-making in the context of private firm lending. Through an institutional theory lens and based on information collected from 108 bankers, we find that IFRS numbers are more trusted than local-GAAP numbers. This trust even increases when creditor protection is weak. Moreover mandatory IFRS adoption in a country influences the trust in the numbers more positively than a voluntary adoption. Also, in the context of private firm lending differences in countries’ formal and informal institutions are able to explain observed cross-country differences in trust and use of financial information.

Item Type:Article
Refereed:Yes
Divisions:Henley Business School > Business Informatics, Systems and Accounting
ID Code:102476
Publisher:Wiley

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