Impact of IFRS Adoption on Key Financial Ratios : Comparison of Selected European Countries

Abstract: This paper analyses the impact of new IFRS reporting rules on financial ratios in comparison with local accounting standards in selected European countries. The article is based mainly on comparison of relevant studies characterizing this subject in different countries. The selection of the countries is as follows: Turkey, Finland, Hungary, Poland, Sweden, Norway and the Czech Republic. Following the performance of this comparison, we have learned that the research in different countries on Europe comes to different results and the impact of IFRS is not homogeneous which is understandable due to different countries background.The second goal of this study is to provide a wider background to our comparative study concentrating on the Czech Republic (Jindrichovska and Kubickova, 2012), which originally started as a conference paper where we used a sample of 18 Czech firms. We attempted to measure the scope and size of the differences in selected set of financial ratios calculated with data reported according to the traditional Czech accounting rules (CAS) and under the IFRS provisions. The Czech research study came to a conclusion, that translation of Czech statements to IFRS did not cause significant changes in the value of financial indicators. One needs to be cautious with generalization due to the small sample size. New methods and approaches identified in this study should be used to enrich the explanatory power of the Czech study