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The switch from IFRS to local GAAP: Evidence from UK private firms

Yu‐Lin Hsu et al.

Advances in Accounting2025https://doi.org/10.1016/j.adiac.2025.100843article
AJG 2ABDC A
Weight
0.37

Abstract

This study examines the determinants of the switch from IFRS to the new UK GAAP, which like IFRS for SMEs aims to be closely aligned with IFRS but requires much less disclosure, in UK private firms. We find that private UK companies are more likely to switch to the new UK GAAP in 2015, the first year when new UK GAAP replaced old UK GAAP, if they have higher sales growth rates or if directors are shareholders. The result further shows that the switch to new UK GAAP helps to reduce the disclosure levels (e.g., fewer pages of annual reports). The consistency with IFRS and reduced disclosure in new UK GAAP may explain why private firms with greater incentives to reduce disclosure level and having fewer problems of information asymmetry may adopt this new framework. Our findings imply that the extensive disclosures required by IFRS may still be a burden for many firms, including those which adopted it before. A reduced framework consistent with IFRS (e.g., the new UK GAAP or IFRS for SMEs) may help to tackle this issue. Furthermore, our results show that the key factors influencing the decision of switching to new UK GAAP during 2016–2022 (i.e., the presence of Big 4 auditors, major shareholders and foreign shareholders/parents) are different from those in 2015, generally in line with previous literature that companies with different adoption incentives would adopt new financial reporting standards at a different time.

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https://doi.org/https://doi.org/10.1016/j.adiac.2025.100843

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@article{yu‐lin2025,
  title        = {{The switch from IFRS to local GAAP: Evidence from UK private firms}},
  author       = {Yu‐Lin Hsu et al.},
  journal      = {Advances in Accounting},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1016/j.adiac.2025.100843},
}

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The switch from IFRS to local GAAP: Evidence from UK private firms

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.