A survey of 75 fund managers has revealed that this year’s adoption of International Financial Reporting Standards (IFRS) has already begun to affect investment decisions according to PricewaterhouseCoopers (PwC).
The results show that 47% said information reported under IFRS had direct influence on decisions, 29% that it had influenced their decisions to move their investment from a company, and 21% that it had been a factor in their deciding not to invest.
Fund managers overall were positive about companies’ adoption of IFRS, suggesting the process of conversion has been relatively smooth: 81% said management had coped effectively, while 70% found the information prepared under IFRS useful.
Ian Dilks, head of IFRS conversions at PwC, suggested the survey results indicate the new standards are moving towards their goal of increased clarity and comparability. While companies must continue their exertions, fund managers would seem to approve of progress made thus far and support the broad aims of IFRS, said Dilks.
KPMG, meanwhile, in analysis of the 2004 financial results of 45 European blue chip companies, restated under IFRS, found that it results in an average profits swing of 43%. The largest positive swing was 407%, the largest negative 30%. The average swing varied from country to country, being 36% in the UK, 27% in the Netherlands and over 60% in France.
Mark Vaessen, head of KPMG’s international financial reporting group, said the application choices available on transition mean analysts must look beyond headlines figures when making comparisons.