Determinants of the Use of IFRS among Medium-Sized Finnish Entities

• In Event: Concurrent Session 3.3: IFRS

Abstract

This study adds to the ongoing discussion on financial reporting practices in entities without public accountability. Specifically, this study examines whether factors associated with the firm’s international activities will predict the voluntary use of IFRS and equivalent financial reporting standards as a complement to using national reporting standards. Data was collected among medium-sized privately held Finnish firms, and the 215 useful responses were analyzed using logistic regression analysis. Findings indicate that the use of IFRS or equivalent standards is significantly associated with a need for international comparability in financial reporting, the level of the firm’s foreign liabilities, the listing status of the parent company, the origin of the parent company, auditor type (Big4 or not) and firm size. No support was found for international business activities, measured by an aggregated measure of a ratio of export sales to total sales and ratio of import to total purchases. These findings extend and strengthen the results of prior studies by indicating that the current level of voluntary use of IFRS or equivalent standards among Finnish medium-sized enterprises appears low, and that the level of internationalization to some extent may determine the rate of voluntary use.

Author

• Benita Maria Gullkvist, Abo Akademi University