IFRS 9 adoption and its impacts on banks’ credit impairment: an international perspective
Resumen
Objective: This paper analyzes the initial impacts of IFRS 9 adoption on banks’ credit impairment level in an international perspective. Specifically, we analyze the impact on banks' financial position and performance, the bank- and country-specific determinants of the impairment magnitudes and the informational effects of the new standard.
Method: The study is based on a sample of 149 listed banks from 12 countries from G20 and bivariate and multivariate analyses are applied.
Results: Results indicate that credit impairment recognized under IFRS 9 is larger than under IAS 39, suggesting a more conservative accounting model and that the new standard affected banks’ performance and financial position. We show that IFRS 9 implementation was significantly different among countries, especially between high- and low-income countries and the information under IFRS 9 is more value-relevant than IAS39.
Contributions: We add to the previous literature by documenting the initial impact of IFRS 9 implementation on financial statements and on value relevance, as well as the bank- and country-specific determinants of the level of this impact.
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Barth, M. E., Beaver, W. H., and Landsman, W. R. (2001), “The relevance of the value relevance literature for financial accounting standard setting: another view”, Journal Accounting and Economics, Vol. 31 No. 1–3, pp.77–104, doi: 10.2139/ssrn.228950.
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Bentley, P. A., and Franklin, M. A. (2013), “Which international cultures favor disclosure of risk”, International Journal of Business, Accounting, and Finance, Vol. 7 No. 2, pp.62–77, Retrieved from http://www.iabpad.com/international-cultures-favor-disclosure-risk/
Bergstresser, D., & Philippon, T. (2006). CEO incentives and earnings management. Journal of financial economics, 80(3), 511-529. https://doi.org/10.1016/j.jfineco.2004.10.011
Bona-Sánchez, C., Pérez-Alemán, J., & Santana-Martín, D. J. (2011). Ultimate ownership and earnings conservatism. European Accounting Review, 20(1), 57-80. https://doi.org/10.1080/09638180903384676
Bouvatier, V., and Lepetit, L. (2012), “Provisioning rules and bank lending: A theoretical model”, Journal of Financial Stability, Vol. 8 No. 1, pp.25-31, doi: https://doi.org/10.1016/j.jfs.2011.04.001
Bova, F., and Pereira, R. (2012), “The determinants and consequences of heterogeneous IFRS compliance levels following mandatory IFRS adoption: Evidence from a developing country”, Journal of International Accounting Research, Vol. 11 No. 1, pp.83–111, doi: https://doi.org/10.2308/jiar-10211.
Brockman, P., Ma, T., & Ye, J. (2015). CEO compensation risk and timely loss recognition. Journal of Business Finance & Accounting, 42(1-2), 204-236. https://doi.org/10.1111/jbfa.12100
Burgstahler, D., & Dichev, I. (1997). Earnings management to avoid earnings decreases and losses. Journal of accounting and economics, 24(1), 99-126. https://doi.org/10.1016/S0165-4101(97)00017-7
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Francis, J., and Schipper, K. (1999), “Have Financial Statements Lost Their Relevance?”, Journal of Accounting Research, Vol. 37 No. 2, pp.319-352, doi: https://doi.org/10.2307/2491412
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Glaum, M., Schmidt, P., Street, D. L., and Vogel, S. (2013), “Compliance with IFRS 3-and IAS 36-required disclosures across 17 European countries: Company-and country-level determinants”, Accounting and Business Research, Vol. 43 No. 3, pp.163–204, doi: https://doi.org/10.1080/00014788.2012.711131
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Gray, S. J. (1980), “The Impact of International Accounting Differences from a Security-Analysis Perspective : Some European Evidence”, Journal of Accounting Research, Vol. 18 No. 1, pp.64–76. https://doi.org/10.1016/B978-0-408-10841-6.50011-7
IFRS. (2018), “Who uses IFRS Standards?”, Retrieved from https://www.ifrs.org/use-around-the-world/use-of-ifrs-standards-by-jurisdiction/#analysis.
Lloyd, S. (2017), “The final countdown”, Banker Middle East, Retrieved from http://link.galegroup.com/apps/doc/A479899332/AONE?u=capes&sid=AONE&xid=575a833b
López‐Espinosa, G., Ormazabal, G., and Sakasai, Y. (2021), “Switching from Incurred to Expected Loan Loss Provisioning: Early Evidence”, Journal of Accounting Research., Vol. 59 No. 3, pp.757-804, doi: https://doi.org/10.1111/1475-679X.12354
Mardini, G.H., Wadi, R.S. and Mah’d, O.A. (2019), “Empirical Evidence of the Suitability of IFRS in Emerging Markets”, Accounting Research Journal, Vol. 32No. 4, pp.553-567, doi: https://doi.org/10.1108/ARJ-04-2017-0065
Novotny-Farkas, Z. (2015), “The significance of IFRS 9 for financial stability and supervisory rules. Policy Department A: Economic and Scientific Policy”, Retrieved from https://op.europa.eu/en/publication-detail/-/publication/849968cd-47f3-11e6-9c64-01aa75ed71a1/language-en
Novotny-Farkas, Z. (2016), “The interaction of the IFRS 9 expected loss approach with supervisory rules and implications for financial stability”, Accounting in Europe, Vol. 13 No.2, pp.197–227. doi: https://doi.org/10.1080/17449480.2016.1210180
Onali, E., and Ginesti, G. (2014), “Pre-adoption market reaction to IFRS 9: A cross-country event-study”, Journal of Accounting and Public Policy, Vol. 33 No. 6, pp. 628–637. doi: https://doi.org/10.1016/j.jaccpubpol.2014.08.004
Remenarić, B., Čevizović, I., and Kenfelja, I. (2018), “Binomial model for measuring expected credit losses from trade receivables in non-financial”, Review of Contemporary Entrepreneurship, Business, and Economic Issues, Vol. 31 No. 1, pp.125–135, Retrieved from https://www.bib.irb.hr/977109?rad=977109
Roychowdhury, S., & Watts, R. L. (2007). Asymmetric timeliness of earnings, market-to-book and conservatism in financial reporting. Journal of Accounting and Economics, 44(1-2), 2-31. https://doi.org/10.1016/j.jacceco.2006.12.003
Visani, F., Di Lascio, F. M. L., and Gardini, S. (2020), “The impact of institutional and cultural factors on the use of non-GAAP financial measures”, Journal of International Accounting, Auditing and Taxation, Vol. 40 No. 100334, doi: https://doi.org/10.1016/j.intaccaudtax.2020.100334
Wells, P. (2002). Earnings management surrounding CEO changes. Accounting & Finance, 42(2), 169-193. https://doi.org/10.1111/1467-629X.00073
White, H. (1980), “A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity”, Econometrica: Journal of the Econometric Society, Vol. 48 No. 4, pp.817-838. https://doi.org/10.2307/1912934
Wittenberg-Moerman, R. (2008). The role of information asymmetry and financial reporting quality in debt trading: Evidence from the secondary loan market. Journal of Accounting and Economics, 46(2-3), 240-260. https://doi.org/10.1016/j.jacceco.2008.08.001
Ball, R. (2006). International Financial Reporting Standards (IFRS): pros and cons for investors. Accounting and business research, 36(sup1), 5-27. https://doi.org/10.1080/00014788.2006.9730040
Ball, R., Kothari, S. P., and Robin, A. (2000), “The effect of international institutional factors on properties of accounting earnings”, Journal of Accounting and Economics, Vol. 29 No. 1, pp.1-51, doi: https://doi.org/10.1016/S0165-4101(00)00012-4
Barth, M. E., Beaver, W. H., and Landsman, W. R. (2001), “The relevance of the value relevance literature for financial accounting standard setting: another view”, Journal Accounting and Economics, Vol. 31 No. 1–3, pp.77–104, doi: 10.2139/ssrn.228950.
Barth, M. E., Landsman, W. R., and Lang, M. H. (2008), “International accounting standards and accounting quality”, Journal of accounting research, 46(3), 467-498, doi: https://doi.org/10.1111/j.1475-679X.2008.00287.x
Bentley, P. A., and Franklin, M. A. (2013), “Which international cultures favor disclosure of risk”, International Journal of Business, Accounting, and Finance, Vol. 7 No. 2, pp.62–77, Retrieved from http://www.iabpad.com/international-cultures-favor-disclosure-risk/
Bergstresser, D., & Philippon, T. (2006). CEO incentives and earnings management. Journal of financial economics, 80(3), 511-529. https://doi.org/10.1016/j.jfineco.2004.10.011
Bona-Sánchez, C., Pérez-Alemán, J., & Santana-Martín, D. J. (2011). Ultimate ownership and earnings conservatism. European Accounting Review, 20(1), 57-80. https://doi.org/10.1080/09638180903384676
Bouvatier, V., and Lepetit, L. (2012), “Provisioning rules and bank lending: A theoretical model”, Journal of Financial Stability, Vol. 8 No. 1, pp.25-31, doi: https://doi.org/10.1016/j.jfs.2011.04.001
Bova, F., and Pereira, R. (2012), “The determinants and consequences of heterogeneous IFRS compliance levels following mandatory IFRS adoption: Evidence from a developing country”, Journal of International Accounting Research, Vol. 11 No. 1, pp.83–111, doi: https://doi.org/10.2308/jiar-10211.
Brockman, P., Ma, T., & Ye, J. (2015). CEO compensation risk and timely loss recognition. Journal of Business Finance & Accounting, 42(1-2), 204-236. https://doi.org/10.1111/jbfa.12100
Burgstahler, D., & Dichev, I. (1997). Earnings management to avoid earnings decreases and losses. Journal of accounting and economics, 24(1), 99-126. https://doi.org/10.1016/S0165-4101(97)00017-7
DeLuca, F., and Prather-Kinsey, J. (2018), “Legitimacy theory may explain the failure of global adoption of IFRS: the case of Europe and the U.S”, Journal of Management and Governance, Vol. 22 No. 3, pp.501–534, doi: https://doi.org/10.1007/s10997-018-9409-9.
Duh, R. R., Lee, W. C., & Lin, C. C. (2009). Reversing an impairment loss and earnings management: The role of corporate governance. The International Journal of Accounting, 44(2), 113-137. https://doi.org/10.1016/j.intacc.2009.03.001
Francis, J., and Schipper, K. (1999), “Have Financial Statements Lost Their Relevance?”, Journal of Accounting Research, Vol. 37 No. 2, pp.319-352, doi: https://doi.org/10.2307/2491412
Gaston, E., and Song, I. W. (2014), “Supervisory roles in loan loss provisioning in countries implementing IFRS”, International Monetary Fund Working Paper, 170, 1–41. Retrieved from http://www.imf.org/external/pubs/ft/wp/2014/wp14170.pdf.
Gebhardt, G. (2016). “Impairments of Greek Government Bonds under IAS 39 and IFRS 9: A Case Study”, Accounting in Europe, Vol. 13 No. 2, pp.169–196, doi: https://doi.org/10.1080/17449480.2016.1208833
Glaum, M., Schmidt, P., Street, D. L., and Vogel, S. (2013), “Compliance with IFRS 3-and IAS 36-required disclosures across 17 European countries: Company-and country-level determinants”, Accounting and Business Research, Vol. 43 No. 3, pp.163–204, doi: https://doi.org/10.1080/00014788.2012.711131
Gornjak, M. (2017), “Comparison of IAS 39 and IFRS 9: The Analysis of Replacement. International”, Journal of Management, Knowledge and Learning, Vol. 6 No. 1, pp.115–130, Retrieved from http://www.issbs.si/press/ISSN/2232-5697/6_115-130.pdf
Gray, S. J. (1980), “The Impact of International Accounting Differences from a Security-Analysis Perspective : Some European Evidence”, Journal of Accounting Research, Vol. 18 No. 1, pp.64–76. https://doi.org/10.1016/B978-0-408-10841-6.50011-7
IFRS. (2018), “Who uses IFRS Standards?”, Retrieved from https://www.ifrs.org/use-around-the-world/use-of-ifrs-standards-by-jurisdiction/#analysis.
Lloyd, S. (2017), “The final countdown”, Banker Middle East, Retrieved from http://link.galegroup.com/apps/doc/A479899332/AONE?u=capes&sid=AONE&xid=575a833b
López‐Espinosa, G., Ormazabal, G., and Sakasai, Y. (2021), “Switching from Incurred to Expected Loan Loss Provisioning: Early Evidence”, Journal of Accounting Research., Vol. 59 No. 3, pp.757-804, doi: https://doi.org/10.1111/1475-679X.12354
Mardini, G.H., Wadi, R.S. and Mah’d, O.A. (2019), “Empirical Evidence of the Suitability of IFRS in Emerging Markets”, Accounting Research Journal, Vol. 32No. 4, pp.553-567, doi: https://doi.org/10.1108/ARJ-04-2017-0065
Novotny-Farkas, Z. (2015), “The significance of IFRS 9 for financial stability and supervisory rules. Policy Department A: Economic and Scientific Policy”, Retrieved from https://op.europa.eu/en/publication-detail/-/publication/849968cd-47f3-11e6-9c64-01aa75ed71a1/language-en
Novotny-Farkas, Z. (2016), “The interaction of the IFRS 9 expected loss approach with supervisory rules and implications for financial stability”, Accounting in Europe, Vol. 13 No.2, pp.197–227. doi: https://doi.org/10.1080/17449480.2016.1210180
Onali, E., and Ginesti, G. (2014), “Pre-adoption market reaction to IFRS 9: A cross-country event-study”, Journal of Accounting and Public Policy, Vol. 33 No. 6, pp. 628–637. doi: https://doi.org/10.1016/j.jaccpubpol.2014.08.004
Remenarić, B., Čevizović, I., and Kenfelja, I. (2018), “Binomial model for measuring expected credit losses from trade receivables in non-financial”, Review of Contemporary Entrepreneurship, Business, and Economic Issues, Vol. 31 No. 1, pp.125–135, Retrieved from https://www.bib.irb.hr/977109?rad=977109
Roychowdhury, S., & Watts, R. L. (2007). Asymmetric timeliness of earnings, market-to-book and conservatism in financial reporting. Journal of Accounting and Economics, 44(1-2), 2-31. https://doi.org/10.1016/j.jacceco.2006.12.003
Visani, F., Di Lascio, F. M. L., and Gardini, S. (2020), “The impact of institutional and cultural factors on the use of non-GAAP financial measures”, Journal of International Accounting, Auditing and Taxation, Vol. 40 No. 100334, doi: https://doi.org/10.1016/j.intaccaudtax.2020.100334
Wells, P. (2002). Earnings management surrounding CEO changes. Accounting & Finance, 42(2), 169-193. https://doi.org/10.1111/1467-629X.00073
White, H. (1980), “A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity”, Econometrica: Journal of the Econometric Society, Vol. 48 No. 4, pp.817-838. https://doi.org/10.2307/1912934
Wittenberg-Moerman, R. (2008). The role of information asymmetry and financial reporting quality in debt trading: Evidence from the secondary loan market. Journal of Accounting and Economics, 46(2-3), 240-260. https://doi.org/10.1016/j.jacceco.2008.08.001
Publicado
2024-09-03
Cómo citar
Lima Ribeiro, C. W., Santana Júnior, J. L. de, Coppe Pimentel, R., & Meirelles Salotti, B. (2024). IFRS 9 adoption and its impacts on banks’ credit impairment: an international perspective. Enfoque: Reflexão Contábil, 43(3), 1-19. https://doi.org/10.4025/enfoque.v43i3.64183
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Original Articles
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