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1. Introduction

The transition from rules-based accounting system to the International Financial Reporting Standards (IFRS) accounting principles is to promote more consistency, credibility, relevance of accounting information and the globalisation of economies (Crawford et al., 2013). Thus, the convergence of the accounting standards started in the early 2001 with the objective of bringing transparency and harmonisation of the standards. The differences in the compliance are rooted in the different market environmental factors and structures of corporate governance in which IFRS is implemented (Whittington, 2008). Since 2005, developed countries like Australia (since 2007), Canada (since 2011) and Europe, European Union (EU) countries were committed to mandatory implementation of IFRS in their respective countries. At present, approximately 140 countries permit IFRS for domestic listed companies, although about 90 countries have fully conformed to the IFRS adoption as circulated by the International Accounting Standards Board (IASB), the adoption has been supported by many international organisations, including the G20, World Bank, International Monetary Fund, Basel Committee, International Organisation of Securities Commissions and International Federation of Accountants.

Adoption of IFRS could produce better reporting quality by companies than those under domestic/local accounting standards (Kim and Shi, 2012a, 2012b), and the uniform adoption allows for greater consistency and comparability under the financial reporting system (Ahmed et al., 2013; Barth et al., 2012; Brochet et al., 2013). The significance of IFRS adoption is that it will provide a better information environment (Horton et al., 2013) about the firms (Florou and Pope, 2012), contribute to a lower cost of capital (Daske et al., 2008; Karamanou and Nishiotis, 2009) and have a positive impact on the earning management (Atwood et al., 2011; Houqe et al., 2012a, 2012b). However, the acceptance of a new paradigm of accounting is not without its share of challenges and inherent problems. The major concerns of adoption of IFRS were:

  • the users of financial statements are unable to understand numbers;

  • the inevitable cost of conversion and additional transition costs (Bova and Pereira, 2012; Christensen, 2012; Daske, 2006; Kim et al., 2011, 2013); and

  • financial statements require more clarity (Jones and Higgins, 2006), and similar inferences have also been made by Hellmann et al. (2010).

Based on IFRS adoption, the literatures in...

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