The impact of an IFRS for SMEs-based standard on financial reporting properties and cost of debt financing : evidence from Swedish private firms
Hellman, Niclas; Nilsson, Henrik; Tylaite, Milda; Vural, Derya (2022-06-21)
Niclas Hellman, Henrik Nilsson, Milda Tylaite & Derya Vural (2022) The Impact of an IFRS for SMEs-Based Standard on Financial Reporting Properties and Cost of Debt Financing: Evidence from Swedish Private Firms, European Accounting Review, 31:5, 1175-1205, DOI: 10.1080/09638180.2022.2085758
© 2022 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives License (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited, and is not altered, transformed, or built upon in any way.
https://creativecommons.org/licenses/by-nc-nd/4.0/
https://urn.fi/URN:NBN:fi-fe2023061956453
Tiivistelmä
Abstract
In 2014, all larger Swedish private firms were required, at short notice, to adopt a new reporting standard (K3) based on IFRS for SMEs (2009 version). Using this shock to the reporting environment, we study the effects of the new reporting standard on groups’ financial reporting properties and cost of debt financing. We find that, following the introduction of K3, private groups exhibit reporting changes consistent with improved accounting quality; their financial statement comparability increases; and their cost of debt declines. Our results suggest that the cost-of-debt decline is related to changes in accounting numbers that are imputed to lending models. Our findings add to the literature on factors shaping private firms’ financial reporting and inform the ongoing discussion on accounting regulation for private firms.
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