Determinants of the choice of permanent options: The Case of European Groups

Abstract

Research Question: What are the determinants that may affect the choices of permanent accounting options adopted by European groups during the transition to IAS/IFRS standards? Motivation: 2005 was the year of the changeover to international standards in Europe. One of the difficulties and one of the challenges of the transition to IFRS for companies relates to the choice of permanent options retained during the first application of the IAS/IFRS standards which constitutes a commitment. It is in this perspective that we have directed our research by studying the determinants of the choices of the permanent options adopted by the European groups during the transition to the IAS/IFRS standards. Idea: The purpose of this article is to study the determinants of the choices of permanent accounting options made during the first adoption of international accounting standards IAS/IFRS. Data: The study sample consisted of 84 publicly listed firms in the Euronext 100 index. Tools: To test study’s hypotheses, we applied a logistical regression. Findings: Results show that industry, and the financial performance are the most used reasons to justify the choice of permanent options. Contribution: Compared to previous studies, our research focused on permanent options, whereas previous research was limited to the study of optional exemptions.

Keywords

• ias/ifrs
• international accounting standards
• ifrs 1
• permanent options
• accounting choices
• first application