IAS/IFRS Short Adoption Journey in an Emerging Economy

This study investigates the impact of IFRS adoption on the transparency and quality of financial statements in Romania from 2012 to 2022. Focusing on compliance with key IAS/IFRS standards, we examine whether increased transparency correlates with profitability, as measured by return on equity (ROE). Utilizing data from the Bucharest Stock Exchange (BVB), we analyze annual reports of companies in the Energy and Manufacturing sectors. We employed a Likert scale to assess compliance and performed regression analyses to evaluate the relationship between compliance and profitability. Our findings indicate a significant increase in transparency over the study period, particularly in the Energy sector, which demonstrated higher compliance scores compared to the Manufacturing sector. Regression results support our first hypothesis, showing a strong positive correlation between IFRS adoption and transparency over time. While the second hypothesis, predicting a positive correlation between compliance and ROE, was less consistently supported, it still revealed significant findings in the Manufacturing sector.