Academic Literature Review: Interaction of IFRS 9 and long-term investment decisions
Barone, E. and Gullkvist, B. (2018) Academic Literature Review: Interaction of IFRS 9 and long-term investment decisions. Project Report. European Financial Reporting Advisory Group.
Abstract
In January 2018, the international financial reporting standard IFRS 9 - Financial Instruments became effective, changing the way companies account for changes in value in equity instruments designated at fair value through other comprehensive income (OCI). We review contemporary academic literature to shed some light on the possible effects of this regulatory change on investment decisions and strategies of long-term investors. In particular, we examine relevant research in understanding long-term investors’ use of information for decision making and their possible reactions to the changes in accounting policies of IFRS 9 related to the removal of recycling (reclassification adjustments) for available-for-sale (AFS) financial assets measured at fair value through OCI. No empirical evidence of the adoption of IFRS 9 was not available. Our review addresses the following specific questions: • How does presentation format of the financial information influence investors’ behaviour? • How value relevant are OCI and AFS related gains and losses? • What are the pros and cons of recycling? • How do accounting requirements influence investment strategies? • What factors influence long-term investors’ investment strategies? To address these questions, we focus mainly on accounting and finance journals published after 2005. While a European perspective would have been desirable, we have also included research under other accounting regulations due to scarce literature, especially on the recycling issue. Still we believe that this review will be useful to the standard setters, accounting profession and academic accounting community as a whole.
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| Official URL: | https://www.efrag.org/sites/default/files/sites/we... |
|---|---|
| Item Type: | Monograph (Project Report) |
| Disciplines: | Social Science > Business & PM |
| Depositing User: | Elisabetta Barone |
| Date Deposited: | 18 Mar 2025 11:51 |
| Last Modified: | 18 Mar 2025 11:51 |
| URI: | https://nul.repository.guildhe.ac.uk/id/eprint/2427 |
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