The Impact of IFRS Adoption on Liquidity, Profitability, and Cost of Capital in Emerging Markets: A Comparative Analysis of Financial and Non-Financial Firms

مؤسسة الشرق الأوسط للنشر العلمي

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الإصدار السادس والعشرون: 06 مايو 2025
من مجلة الشرق الأوسط للنشر العلمي

The Impact of IFRS Adoption on Liquidity, Profitability, and Cost of Capital in Emerging Markets: A Comparative Analysis of Financial and Non-Financial Firms

Ohoud ALAbdan & Annika Beelitz
Abstract

This study investigates the impact of International Financial Reporting Standards (IFRS) adoption on the financial performance of listed companies in emerging economies, focusing on liquidity, profitability, and cost of capital. Using a sample of 43 emerging economies from 2005 to 2014, the research employs ANOVA and Ordinary Least Squares (OLS) regression models to analyze the effects of IFRS adoption on key financial ratios. The findings reveal that IFRS adoption does not significantly affect profitability (ROE and ROCE) or cost of capital (WACC). However, the impact on liquidity is mixed, with a significant negative effect on the quick ratio (QR) but no significant effect on the current ratio (CR). The study also finds no significant differences in the impact of IFRS adoption between financial and non-financial firms. These results suggest that the benefits of IFRS adoption in emerging markets may be limited, particularly in terms of improving financial performance metrics.

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