Free flow of capital across the borders internationally is a complex issue because of the differences in accounting processes across the world. International Financial Reporting Standards (IFRS) bring all the firms on one platform for presenting their financial performance and understanding the financial status of the firms. The financial statements prepared as per the IFRS should attract investments to the companies and increase the share price. Also, the adoption of IFRS should make the companies perform better. In the paper, “The Impact of Adoption of IFRS on Shareholders’ Wealth: A Study of Select Indian Companies”, the authors, Samta Ordia and Shurveer S Bhanawat, study the effect of adoption of IFRS in Indian firms on the wealth maximization of shareholders. The authors measure the performance of firms using Economic Value-Added (EVA), a well-researched and used variable in many of the studies. The authors argue that the adoption of IFRS should lead to increase in EVA and find that there is no significant difference in EVA of the firms before and after the adoption of IFRS. Further, they observe that the adoption of IFRS has led to consistency in EVA, i.e., financial performance of the firms.

Small entrepreneurs across the world run businesses with very less resources and cannot spend on making the accounts, but have to know about the financial status and performance of their businesses. Therefore, they learn the fundamental accounting process and implement the process of accounting for their business without increasing overhead until the profits are sufficient. In the second paper, “Small Businesses and Accounting Skills: A Study on Entrepreneurs of Ahmedabad City”, the author, Himani Sardar, makes an effort to understand the cognizance, application and importance given to accounting principles by the small business owners in Ahmedabad city of Gujarat. It is observed from the primary survey conducted, that the small entrepreneurs understand the importance of accounting and record manually. Further, they use such systems to evaluate the financial performance of their business and to plan for taxes.

In the next paper, “Value Relevance of Accounting Information: An Empirical Study on Construction Companies Listed on Bombay Stock Exchange”, the authors, Geetanjali Purswani and Anuradha P S, investigate the association between the accounting information provided by construction companies and the response of market participants in the share market, i.e., the influence of accounting information on the share price of the firm, by considering the firms listed on Bombay Stock Exchange, India. The authors find that there are two vital variables that influence the market price of the share; they are earnings per share and price-to-book value per share.

Evaluation of the financial performance of firms has been evolving over a period of time, and there have been numerous methods of performance evaluation. The models for evaluating banking firms too have evolved and BASEL norms have been laid down to monitor the financial health of the banks. In the last paper, “Evaluating the Financial Performance of Select Indian Banks Using Eagles Model”, the authors, G Santhoshi Kumari and M S V Prasad, have adopted Eagles—earning ability, asset quality, growth, liquidity, equity and strategy—model to analyze if there is any difference in the performance of public and private sector banks in India. The findings reveal significant difference in the performance of selected public and private sector banks.

-- Vunyale Narender
Consulting Editor