Effect of IFRS adoption on financial ratios: A study on NIFTY50 in Indian context

To identify t differences between the Indian GAAP-based and International Financial Reporting Standards (IFRS)-based financial statements in terms of financial ratios.

A sample of 30 companies using a filter scale was used. The population of the study comprises NIFTY-50 companies listed in the National Stock Exchange of India. Mean and Standard Deviation are used to know the changes in financial performance and a pair t-test is used to recognise its significance difference between the pre- and post-IFRS-adoption in India.

The main finding from the study is that IFRS adoption has caused a positive impact on the financial ratios of Indian listed firms, though it was not statistically significant.

This paper is possibly one of the first to find out the difference between the Indian GAAP-based and IFRS-based financial statements in terms of the financial ratios.

The findings raise the awareness that analysts and other financial statement users should be mindful of the new features of a financial statement when taking economic decisions during this period of transition to IFRS in India.

The study is conducted by taking just the standalone financial statements of only 30 companies and the post-adoption period is taken only for 3 years. Further banking and insurance companies are not considered due to their delay in IFRS adoption. The above problems provide further scope for the study.