Impact of Mandatory IFRS Adoption on Conditional Conservatism in Europe
type: Dataset
description: We study the effect of the mandatory adoption of IFRS in Europe in 2005 on conditional conservatism. To capture conditional conservatism, we use three measures: the Basu (1997) measure, the Khan and Watts (2009) measure, and a measure controlling for potential shifts in unconditional conservatism and cost of capital after the adoption of IFRS. From a sample of 7,251 firm-year observations drawn from 16 European countries, we document an overall decline of the degree of conditional conservatism across our three measures. While there is no change in weak enforcement/governance countries which remain less conditionally conservative than strong enforcement/governance countries, the latter exhibit a significant decrease. Further, we demonstrate that the decline is more significant for firms carrying intangible assets and goodwill in their balance sheets, items for which impairment tests rely on unverifiable fair value estimates. We argue that IFRS are conceptually conditionally conservative but that inappropriate application of conditional conservatism principles may have prevented financial reporting from reaching the level of conservatism targeted by the IASB.
issued: 2026-05-09T17:30:58.667777
language: en
modified: 2026-05-09T17:30:58.667781
contact point: Organization
  fn: CCSD
keyword: conditional-conservatism
keyword: enforcement
keyword: europe
keyword: governance
keyword: ifrs
keyword: impairment
keyword: infoeu-reposemanticspreprint
keyword: intangibles
keyword: jel-m---business-administration-and-business-economics--marketing--accounting--personnel-economi
keyword: preprints-working-papers-
keyword: shsgestioncomptahumanities-and-social-sciencesbusiness-administrationdomainshsgestioncompta
landing page: https://essec.hal.science/hal-00862683

Impact of Mandatory IFRS Adoption on Conditional Conservatism in Europe
type: Distribution
format: HTML
issued: 2026-05-09T17:30:58.676929
modified: 2026-05-09T17:30:58.655956
access URL: https://essec.hal.science/hal-00862683

test_moissonnage_selune
type: Agent