IFRS Adoption in Research and Development Companies

Globally, the use of the IFRS in financial reporting is the requirement in many countries. However, the question of whether such a global transition towards a single set of accounting standards has been met by the presumed benefits of higher accounting quality and comparability yet remains unanswered. This paper primarily examines the effect of the mandatory IFRS adoption in Canada by the research and development companies. It was a comparative study between the Canadian GAAP financial reporting from 2008 to 2010 and IFRS financial reporting from 2011 to 2012. Since this research is an empirical study, the quantitative research method is applied. The research question of this research study is: Does IFRS adoption improve accounting quality in research and development companies? This research finds that lower persistency and predictability in earnings; decrease in earnings influence to shareholder value; weak volatility in market price; better predictability of cash flow and financial forecasts; increase in accruals and timeliness loss of recognition; and decrease in research and development expenditures