The Role of International Financial Reporting Standards (IFRS) in Reducing the Asymmetry of Accounting Information and Its Reflection on the Quality of Financial Reporting

Abstract

The paper highlights the influence of International Financial Reporting Standards (IFRS) on reducing information asymmetry in accounting and improving the quality of financial reports.

Researchers concentrated on twelve commercial banks listed on the Iraq Stock Exchange. They analyzed actual financial data spanning 6 years, divided equally into 3 years before the adoption of IFRS and 3 years after implementation.

To measure the impact of IFRS on information asymmetry, we used the dispersion of financial analysts' forecasts, and they applied a modified version of the Jones (1991) total accruals model to assess how the adoption of IFRS affected on the quality of reported profits.

The study has reached important results: IFRS are global governing standards that show the compatibility of financial reports prepared by economic units, financial reporting requirements, and the size of coordination in accounting practices. The asymmetry of accounting information affects economic units from several aspects like increase financial expenses for investment and then increase financing costs.