Economic consequences of the adoption of the International Financial Reporting Standards: evidences in the research literature

Along with the economic globalization, the international accounting regulation bodies faced the need to issue internationally accepted global accounting standards. The effect was the issuance and the widespread of the International Financial Reporting Standards (IFRS). At European level, the IFRS gained legitimacy in 2002, when the European Parliament and Council have decided that all European publicly traded entities must prepare their consolidated financial statements in accordance with IFRS starting with January 1st, 2005. The regulation from 2002 on the application of the international standards in EU summarizes the benefits emerging from the adoption and use of IFRS, related to: a high degree of transparency and comparability of financial statements and, as consequence, an efficient functioning capital market. However, the achievement of these expected benefits is based on the assumption that the application of these standards contributes to the increase in the quality of accounting data reported in the financial statements. In this context, our main objective is to summarize, based on the research literature, the economic consequences that emerge from the publication of higher quality accounting data in accordance with IFRS.