The impact of IFRS accounting standards on the risk assessment of firms in Colombia
Main Article Content
Keywords
Cost of capital, interest, corporate finance, financial risk, accounting standards
Abstract
Objective: This paper aimed to study the impact of implementing the International Financial Reporting Standards (IFRS) on companies’ risk assessment. Method: For the above, the financial asset valuation model was calculated for 18 thousand companies in Colombia before and after 2015, the year of the implementation of the IFRS in this country. Results: The cost of capital increased by 4% after applying IFRS standards, although the weight of financial risk in the total risk did not change due to adopting the new accounting standards. Discussions: Companies dedicated to sectors related to raw materials, real estate activities, and natural resources showed greater sensitivity to market performance; however, companies in the manufacturing industry showed a negative correlation with the market. Conclusions: It can be concluded that IFRS contributes to a better valuation of the risk of the companies’ capital by better discounting the capacity of the firms to generate cash flows and profits to face debts.
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References
Aguirre, R. (2015). Estándares Internacionales de Información Financiera: Algunos efectos en las organizaciones empresariales. Lúmina, (16), 112–135. https://doi.org/10.30554/lumina.16.1671.2015
Apergis, N., & Rehman, M. U. (2018). Is CAPM a Behavioral Model? Estimating Sentiments from Rationalism. Journal of Behavioral Finance, 19(4), 442-449. https://doi.org/10.1080/15427560.2018.1431885
Ball, R. (2016). IFRS–10 years later. Accounting and Business Research, 46(5), 545-571. https://doi.org/10.2139/ssrn.2745245
Bao, T., Diks, C., & Li, H. (2018). A generalized CAPM model with asymmetric power distributed errors with an application to portfolio construction. Economic Modelling, 68, 611-621. https://doi.org/10.1016/j.econmod.2017.03.035
Berry‐Stölzle, T., & Xu, J. (2018). Enterprise risk management and the cost of capital. Journal of Risk and Insurance, 85(1), 159-201. https://doi.org/10.1111/jori.12152
Boz, G., Plans, C. M., Guerrero, N. O., y Jiménez, D. P. (2015). ¿Influyen las Normas Internacionales de Información Financiera en el riesgo de las acciones? Contaduría y administración, 60(3), 556-577. https://doi.org/10.1016/j.cya.2015.05.010
Beltrán, V. (2006). Determinación del coeficiente beta en el modelo CAPM. [Tesis Doctoral, Universidad Nacional de Colombia-Sede Manizales] Repositorio Institucional UNAL. https://repositorio.unal.edu.co/handle/unal/3425
Brealey, R. Myers, S., & Allen, F. (2015). Principios de Finanzas Corporativas (11a ed.). McGraw-Hill.
Botello-Peñaloza, H. (2015). Determinantes del acceso al crédito de las PYMES en Colombia. Ensayos de Economía, 25(46), 135-156. https://revistas.unal.edu.co/index.php/ede/article/view/53631
Capkun, V., Collins, D., & Jeanjean, T. (2016). The effect of IAS/IFRS adoption on earnings management (smoothing): A closer look at competing explanations. Journal of Accounting and Public Policy, 35(4), 352-394. https://doi.org/10.1016/j.jaccpubpol.2016.04.002
Cardona, H. y Quintero, D. (2015). Efectos de la aplicación de IFRS en países menos desarrollados: Revisión de estudios empíricos. Lúmina, (16), 86-111. https://doi.org/10.30554/lumina.16.1670.2015
Carvajal, S. y Casallas, R. (2016). Los aspectos cualitativos en las Pymes y los nuevos retos gerenciales frente a las NIIF. Revista academia y virtualidad, 9(2), 7. https://doi.org/10.18359/ravi.2010
Castaño-Rios, C., Zamarra-Londoño, J., y Correa-García, J. A. (2014). Efectos financieros en una cooperativa colombiana por la implementación de estándares internacionales de información financiera para las pyme en su balance de apertura. Cuadernos de contabilidad, 15(38). https://doi.org/10.11144/javeriana.cc15-38.efcc
Chen, M. (2013). Risk determinants of China's hotel industry. Tourism Economics, 19(1), 77-99. https://doi.org/10.5367/te.2013.0183
Christensen, H., Hail, L., & Leuz, C. (2013). Mandatory IFRS reporting and changes in enforcement. Journal of Accounting and Economics, 56(2-3), 147-177. https://doi.org/10.2139/ssrn.2351466
Clavellina, J. (2018). Determinantes del tipo de cambio y su volatilidad. Economía UNAM, 15(45), 70-88. http://revistaeconomia.unam.mx/index.php/ecu/article/view/406
Da, Z., Guo, R. J., y Jagannathan, R. (2012). CAPM for estimating the cost of equity capital: Interpreting the empirical evidence. Journal of Financial Economics, 103(1), 204-220. https://doi.org/10.3386/w14889
Dempsey, M. (2013). The capital asset pricing model (CAPM): the history of a failed revolutionary idea in finance?. Abacus, 49, 7-23. https://doi.org/10.2139/ssrn.2260197
De George, E., Li, X., & Shivakumar, L. (2016). A review of the IFRS adoption literature. Review of Accounting Studies, 21(3), 898-1004. https://doi.org/10.2139/ssrn.2664475
Džaja, J., & Aljinović, Z. (2013). Testing CAPM model on the emerging markets of the Central and Southeastern Europe. Croatian Operational Research Review, 4(1), 164-175. https://doi.org/10.5261/2015.gen3.01
Ehrhardt, M., y Brigham, E. (2007). Finanzas corporativas. Cengage Learning Editores.
Frank, M., & Shen, T. (2016). Investment and the weighted average cost of capital. Journal of Financial Economics, 119(2), 300-315. https://doi.org/10.1007/springerreference_2818
Han, F., & He, H. (2013). Cost of equity capital of foreign firms. Review of Accounting and Finance, 12(3), 268–285. https://doi.org/10.1007/springerreference_1129
Ipino, E., & Parbonetti, A. (2017). Mandatory IFRS adoption: the trade-off between accrual-based and real earnings management. Accounting and Business Research, 47(1), 91-121. https://doi.org/10.2139/ssrn.2039711
Kim, J., Shi, H., & Zhou, J. (2014). International Financial Reporting Standards, institutional infrastructures, and implied cost of equity capital around the world. Review of Quantitative Finance and Accounting, (42), 469–507. https://doi.org/10.2139/ssrn.984127
Kisman, Z., & Restiyanita, S. (2015). The Validity of Capital Asset Pricing Model (CAPM) and Arbitrage Pricing Theory (APT) in Predicting the Return of Stocks in Indonesia Stock Exchange. American Journal of Economics, Finance and Management, 1(3), 184-189. http://www.aiscience.org/journal/ajefm
Kundu, A., & Mukhopadhyay, C. (2016). Capital asset pricing model (CAPM) and Indian stock market with autoregressive integrated moving average model. Delhi Business Review, 17(1), 97-114. https://www.indianjournals.com/ijor.aspx?target=ijor:dbr&volume=17&issue=1&article=008
Landsman, W., Maydew, E. & Thornock, J. (2012). The information content of annual earnings announcements and mandatory adoption of IFRS. Journal of accounting and economics, 53(1-2), 34-54. https://doi.org/10.1016/j.jacceco.2011.04.002
Lee, A., Lee, J., & Lee, C. (2016). Alternative Cost of Capital Analysis and Estimation. World Scientific Book Chapters (pp. 535-579). https://doi.org/10.1142/9789814723855_0012
Levi, Y., & Welch, I. (2017). Best practice for cost-of-capital estimates. Journal of Financial and Quantitative Analysis, 52(2), 427-463. https://doi.org/10.1017/s0022109017000114
Li, B., y Zhong, M. (2010). Predictability of stock returns and consumption-based CAPM: Evidence from a small open market. European Journal of Economics, Finance and Administrative Sciences, (22), 146-171. https://doi.org/10.1186/2193-1801-3-428
Lotero, R., y Molano, V. (2008). Capital asset pricing model-Robert Merton-: teoría y evidencia empírica para Colombia 2001-2007. Cuadernos Latinoamericanos de Administración, 4(6), 7-34. https://revistas.unbosque.edu.co/index.php/cuaderlam/article/view/1512/1118
Montaño, A., Rodríguez, E., y Quevedo, J. (2018). Análisis del impacto de implementación de las normas internacionales de información financiera (NIIF) en el sector industrial de Bogotá para PYMEs. Cuadernos de Contabilidad, 19(48), 1-18. https://doi.org/10.11144/javeriana.cc19-48.aiin
Morales, F. (2018). El caso de las IFRS en las PYMEs chilenas: reflexiones a partir de una norma internacional aparentemente poco utilizada. CAFI-Contabilidade, Atuária, Finanças y Informação, 1(2), 193-209. https://doi.org/10.23925/cafi.v1i2.40865
Moscariello, N., Skerratt, L., & Pizzo, M. (2014). Mandatory IFRS adoption and the cost of debt in Italy and UK. Accounting and Business Research, 44(1), 63-82. https://doi.org/10.1080/00014788.2013.867402
Odobašić, S., Tolušić, M., & Tolušić, Z. (2014). The application of the CAPM model on selected shares on the Croatian capital market. Ekonomski vjesnik: Review of Contemporary Entrepreneurship, Business, and Economic Issues, 27(2), 297-311. https://hrcak.srce.hr/132838
Orobio, A., Rodriguez, E., y Acosta, J. C. (2019). Análisis del impacto de implementación de las normas internacionales de información financiera (NIIF) en el sector industrial de Bogotá para PYMEs. Cuadernos De Contabilidad, 19(48), 1-18. https://doi.org/10.11144/Javeriana.cc19-48.aiin
Papadamou, S., & Tzivinikos, T. (2013). The risk relevance of international financial reporting standards: evidence from Greek banks. International Review of Financial Analysis, 27(2013), 43-54. https://doi.org/10.1016/j.irfa.2012.09.006
Patiño, J. (2015). A salvar los hospitales, no las EPS: La crisis estructural de sistema de salud. Revista Colombiana de Cirugía, 30(4), 263-264. https://www.revistacirugia.org/index.php/cirugia/article/view/373
Quevedo, N. (2013). Impacto de las Normas de Información Financiera en la relevancia de la información financiera en México. Contaduría y administración, 58(2), 61-89. https://doi.org/10.1016/s0186-1042(13)71210-5
Ramírez, A., & Serna, M. (2012). Empirical validation of CAPM for Colombia 2003-2010. Ecos de Economía, 16(34), 49-74. https://doi.org/10.17230/ecos.2012.34.3
Rendón-Álvarez, B., Montaño-Orozco, E., y Gaitán-León, G. (2013). International Financial Reporting Standards IFRS and Their Impact on Cooperatives in Colombia. Cuadernos de Administración, 29(50), 176-185. https://doi.org/10.25100/cdea.v29i50.53
Rojas, E., Guzmán, J., y Escalona, J. (2019). Volatilidad cambiaria, metas de inflación y crisis financiera global. Evidencia para economías latinoamericanas. Revista Economía y Política, 30(2019), 157-175. https://doi.org/10.25097/rep.n30.2019.07
Salazar, L. (2017). Impacto de la implementación de las normas internacionales de información financiera en la profesión contable. [Trabajo diplomado] Universidad Militar Nueva Granada https://repository.unimilitar.edu.co/bitstream/handle/10654/17066/SalazarGomezLadyYeraldin2017.pdf?sequence=1
Singleton-Green, B. (2015). The effects of mandatory IFRS adoption in the EU: A review of empirical research. Information for Better Markets, Forthcoming. https://doi.org/10.2139/ssrn.1511671.
Uribe, J., Jiménez, D., y Fernández, J. (2015). Regímenes de volatilidad del tipo de cambio en Colombia e intervenciones de política. Investigación económica, 74(293), 131-170. https://doi.org/10.1016/j.inveco.2015.06.002
Vergara-Novoa, C., Sepúlveda-Rojas, J. P., Alfaro, M. D., & Riveros, N. (2018). Cost of Capital Estimation for Highway Concessionaires in Chile. Journal of Advanced Transportation, (2018). https://doi.org/10.1155/2018/2153536
Zavatti, E., y Gutiérrez, H. (2007). La tasa de descuento y el riesgo-país. Un modelo basado en la teoría de cartera. In Anales de la Universidad Metropolitana, 7(1), 179-202. https://doi.org/10.4272/978-84-9745-061-4.ch7
Zúñiga, S., y Soria, K. (2009). Costo del capital en el sector pesquero-acuícola Chileno. Interciencia, 34(8), 543-550. https://doi.org/10.2307/j.ctt20fw7tf.5
Apergis, N., & Rehman, M. U. (2018). Is CAPM a Behavioral Model? Estimating Sentiments from Rationalism. Journal of Behavioral Finance, 19(4), 442-449. https://doi.org/10.1080/15427560.2018.1431885
Ball, R. (2016). IFRS–10 years later. Accounting and Business Research, 46(5), 545-571. https://doi.org/10.2139/ssrn.2745245
Bao, T., Diks, C., & Li, H. (2018). A generalized CAPM model with asymmetric power distributed errors with an application to portfolio construction. Economic Modelling, 68, 611-621. https://doi.org/10.1016/j.econmod.2017.03.035
Berry‐Stölzle, T., & Xu, J. (2018). Enterprise risk management and the cost of capital. Journal of Risk and Insurance, 85(1), 159-201. https://doi.org/10.1111/jori.12152
Boz, G., Plans, C. M., Guerrero, N. O., y Jiménez, D. P. (2015). ¿Influyen las Normas Internacionales de Información Financiera en el riesgo de las acciones? Contaduría y administración, 60(3), 556-577. https://doi.org/10.1016/j.cya.2015.05.010
Beltrán, V. (2006). Determinación del coeficiente beta en el modelo CAPM. [Tesis Doctoral, Universidad Nacional de Colombia-Sede Manizales] Repositorio Institucional UNAL. https://repositorio.unal.edu.co/handle/unal/3425
Brealey, R. Myers, S., & Allen, F. (2015). Principios de Finanzas Corporativas (11a ed.). McGraw-Hill.
Botello-Peñaloza, H. (2015). Determinantes del acceso al crédito de las PYMES en Colombia. Ensayos de Economía, 25(46), 135-156. https://revistas.unal.edu.co/index.php/ede/article/view/53631
Capkun, V., Collins, D., & Jeanjean, T. (2016). The effect of IAS/IFRS adoption on earnings management (smoothing): A closer look at competing explanations. Journal of Accounting and Public Policy, 35(4), 352-394. https://doi.org/10.1016/j.jaccpubpol.2016.04.002
Cardona, H. y Quintero, D. (2015). Efectos de la aplicación de IFRS en países menos desarrollados: Revisión de estudios empíricos. Lúmina, (16), 86-111. https://doi.org/10.30554/lumina.16.1670.2015
Carvajal, S. y Casallas, R. (2016). Los aspectos cualitativos en las Pymes y los nuevos retos gerenciales frente a las NIIF. Revista academia y virtualidad, 9(2), 7. https://doi.org/10.18359/ravi.2010
Castaño-Rios, C., Zamarra-Londoño, J., y Correa-García, J. A. (2014). Efectos financieros en una cooperativa colombiana por la implementación de estándares internacionales de información financiera para las pyme en su balance de apertura. Cuadernos de contabilidad, 15(38). https://doi.org/10.11144/javeriana.cc15-38.efcc
Chen, M. (2013). Risk determinants of China's hotel industry. Tourism Economics, 19(1), 77-99. https://doi.org/10.5367/te.2013.0183
Christensen, H., Hail, L., & Leuz, C. (2013). Mandatory IFRS reporting and changes in enforcement. Journal of Accounting and Economics, 56(2-3), 147-177. https://doi.org/10.2139/ssrn.2351466
Clavellina, J. (2018). Determinantes del tipo de cambio y su volatilidad. Economía UNAM, 15(45), 70-88. http://revistaeconomia.unam.mx/index.php/ecu/article/view/406
Da, Z., Guo, R. J., y Jagannathan, R. (2012). CAPM for estimating the cost of equity capital: Interpreting the empirical evidence. Journal of Financial Economics, 103(1), 204-220. https://doi.org/10.3386/w14889
Dempsey, M. (2013). The capital asset pricing model (CAPM): the history of a failed revolutionary idea in finance?. Abacus, 49, 7-23. https://doi.org/10.2139/ssrn.2260197
De George, E., Li, X., & Shivakumar, L. (2016). A review of the IFRS adoption literature. Review of Accounting Studies, 21(3), 898-1004. https://doi.org/10.2139/ssrn.2664475
Džaja, J., & Aljinović, Z. (2013). Testing CAPM model on the emerging markets of the Central and Southeastern Europe. Croatian Operational Research Review, 4(1), 164-175. https://doi.org/10.5261/2015.gen3.01
Ehrhardt, M., y Brigham, E. (2007). Finanzas corporativas. Cengage Learning Editores.
Frank, M., & Shen, T. (2016). Investment and the weighted average cost of capital. Journal of Financial Economics, 119(2), 300-315. https://doi.org/10.1007/springerreference_2818
Han, F., & He, H. (2013). Cost of equity capital of foreign firms. Review of Accounting and Finance, 12(3), 268–285. https://doi.org/10.1007/springerreference_1129
Ipino, E., & Parbonetti, A. (2017). Mandatory IFRS adoption: the trade-off between accrual-based and real earnings management. Accounting and Business Research, 47(1), 91-121. https://doi.org/10.2139/ssrn.2039711
Kim, J., Shi, H., & Zhou, J. (2014). International Financial Reporting Standards, institutional infrastructures, and implied cost of equity capital around the world. Review of Quantitative Finance and Accounting, (42), 469–507. https://doi.org/10.2139/ssrn.984127
Kisman, Z., & Restiyanita, S. (2015). The Validity of Capital Asset Pricing Model (CAPM) and Arbitrage Pricing Theory (APT) in Predicting the Return of Stocks in Indonesia Stock Exchange. American Journal of Economics, Finance and Management, 1(3), 184-189. http://www.aiscience.org/journal/ajefm
Kundu, A., & Mukhopadhyay, C. (2016). Capital asset pricing model (CAPM) and Indian stock market with autoregressive integrated moving average model. Delhi Business Review, 17(1), 97-114. https://www.indianjournals.com/ijor.aspx?target=ijor:dbr&volume=17&issue=1&article=008
Landsman, W., Maydew, E. & Thornock, J. (2012). The information content of annual earnings announcements and mandatory adoption of IFRS. Journal of accounting and economics, 53(1-2), 34-54. https://doi.org/10.1016/j.jacceco.2011.04.002
Lee, A., Lee, J., & Lee, C. (2016). Alternative Cost of Capital Analysis and Estimation. World Scientific Book Chapters (pp. 535-579). https://doi.org/10.1142/9789814723855_0012
Levi, Y., & Welch, I. (2017). Best practice for cost-of-capital estimates. Journal of Financial and Quantitative Analysis, 52(2), 427-463. https://doi.org/10.1017/s0022109017000114
Li, B., y Zhong, M. (2010). Predictability of stock returns and consumption-based CAPM: Evidence from a small open market. European Journal of Economics, Finance and Administrative Sciences, (22), 146-171. https://doi.org/10.1186/2193-1801-3-428
Lotero, R., y Molano, V. (2008). Capital asset pricing model-Robert Merton-: teoría y evidencia empírica para Colombia 2001-2007. Cuadernos Latinoamericanos de Administración, 4(6), 7-34. https://revistas.unbosque.edu.co/index.php/cuaderlam/article/view/1512/1118
Montaño, A., Rodríguez, E., y Quevedo, J. (2018). Análisis del impacto de implementación de las normas internacionales de información financiera (NIIF) en el sector industrial de Bogotá para PYMEs. Cuadernos de Contabilidad, 19(48), 1-18. https://doi.org/10.11144/javeriana.cc19-48.aiin
Morales, F. (2018). El caso de las IFRS en las PYMEs chilenas: reflexiones a partir de una norma internacional aparentemente poco utilizada. CAFI-Contabilidade, Atuária, Finanças y Informação, 1(2), 193-209. https://doi.org/10.23925/cafi.v1i2.40865
Moscariello, N., Skerratt, L., & Pizzo, M. (2014). Mandatory IFRS adoption and the cost of debt in Italy and UK. Accounting and Business Research, 44(1), 63-82. https://doi.org/10.1080/00014788.2013.867402
Odobašić, S., Tolušić, M., & Tolušić, Z. (2014). The application of the CAPM model on selected shares on the Croatian capital market. Ekonomski vjesnik: Review of Contemporary Entrepreneurship, Business, and Economic Issues, 27(2), 297-311. https://hrcak.srce.hr/132838
Orobio, A., Rodriguez, E., y Acosta, J. C. (2019). Análisis del impacto de implementación de las normas internacionales de información financiera (NIIF) en el sector industrial de Bogotá para PYMEs. Cuadernos De Contabilidad, 19(48), 1-18. https://doi.org/10.11144/Javeriana.cc19-48.aiin
Papadamou, S., & Tzivinikos, T. (2013). The risk relevance of international financial reporting standards: evidence from Greek banks. International Review of Financial Analysis, 27(2013), 43-54. https://doi.org/10.1016/j.irfa.2012.09.006
Patiño, J. (2015). A salvar los hospitales, no las EPS: La crisis estructural de sistema de salud. Revista Colombiana de Cirugía, 30(4), 263-264. https://www.revistacirugia.org/index.php/cirugia/article/view/373
Quevedo, N. (2013). Impacto de las Normas de Información Financiera en la relevancia de la información financiera en México. Contaduría y administración, 58(2), 61-89. https://doi.org/10.1016/s0186-1042(13)71210-5
Ramírez, A., & Serna, M. (2012). Empirical validation of CAPM for Colombia 2003-2010. Ecos de Economía, 16(34), 49-74. https://doi.org/10.17230/ecos.2012.34.3
Rendón-Álvarez, B., Montaño-Orozco, E., y Gaitán-León, G. (2013). International Financial Reporting Standards IFRS and Their Impact on Cooperatives in Colombia. Cuadernos de Administración, 29(50), 176-185. https://doi.org/10.25100/cdea.v29i50.53
Rojas, E., Guzmán, J., y Escalona, J. (2019). Volatilidad cambiaria, metas de inflación y crisis financiera global. Evidencia para economías latinoamericanas. Revista Economía y Política, 30(2019), 157-175. https://doi.org/10.25097/rep.n30.2019.07
Salazar, L. (2017). Impacto de la implementación de las normas internacionales de información financiera en la profesión contable. [Trabajo diplomado] Universidad Militar Nueva Granada https://repository.unimilitar.edu.co/bitstream/handle/10654/17066/SalazarGomezLadyYeraldin2017.pdf?sequence=1
Singleton-Green, B. (2015). The effects of mandatory IFRS adoption in the EU: A review of empirical research. Information for Better Markets, Forthcoming. https://doi.org/10.2139/ssrn.1511671.
Uribe, J., Jiménez, D., y Fernández, J. (2015). Regímenes de volatilidad del tipo de cambio en Colombia e intervenciones de política. Investigación económica, 74(293), 131-170. https://doi.org/10.1016/j.inveco.2015.06.002
Vergara-Novoa, C., Sepúlveda-Rojas, J. P., Alfaro, M. D., & Riveros, N. (2018). Cost of Capital Estimation for Highway Concessionaires in Chile. Journal of Advanced Transportation, (2018). https://doi.org/10.1155/2018/2153536
Zavatti, E., y Gutiérrez, H. (2007). La tasa de descuento y el riesgo-país. Un modelo basado en la teoría de cartera. In Anales de la Universidad Metropolitana, 7(1), 179-202. https://doi.org/10.4272/978-84-9745-061-4.ch7
Zúñiga, S., y Soria, K. (2009). Costo del capital en el sector pesquero-acuícola Chileno. Interciencia, 34(8), 543-550. https://doi.org/10.2307/j.ctt20fw7tf.5
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Jan 1, 2021
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Botello-Peñaloza , H. A. (2021). The impact of IFRS accounting standards on the risk assessment of firms in Colombia. Desarrollo Gerencial, 13(1), 1–20. https://doi.org/10.17081/dege.13.1.4049
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