Abstract:
The purpose of this study is to examine the perceived impact of
International Financial Reporting Standards (IFRS) adoption and whether it
relates to firms’ characteristics. The study was conducted among all
62 companies listed in bank, finance and insurance sector at Colombo Stock
Exchange (CSE) using questionnaires addressed to financial and accounting
professionals. The study employed principal component analysis and onesample Wilcoxon signed-rank test and found that the IFRS adoption is
perceived to have significantly improved financial reporting quality and
corporate governance of firms. Though IFRS caused increased cost of financial
reporting, it is yet perceived to be a net gain. However, respondents tend to
perceive that IFRS adoption has not assured capital market benefits to the firms
in bank, finance and insurance sector in Sri Lanka. It is also found that firms’
size and profitability significantly and positively associate with perceived
impact of IFRS on quality of financial reporting and corporate governance of
firms. This study provides evidence for IFRS impact from a developing
economy.
