CAPIC REVIEW

Journal of Accounting, Auditing and Business Management

ISSN 0718-4662

logo revista Capic Review
Vol. 22 (2024): CAPIC REVIEW
Investigation

The effect of IFRS 16 on financial indicators of profitability and indebtedness

PDF (Español (España))
  • Wilvelder Alejandro Varona-Calle,
  • George Luis Calle-Zegarra,
  • María Jesús Farfán-Manrique
Wilvelder Alejandro Varona-Calle
Universidad de Piura
George Luis Calle-Zegarra
Universidad de Piura
María Jesús Farfán-Manrique
Universidad de Piura
DOI: https://doi.org/10.35928/cr.vol22.2024.223
Categories

Published 2024-05-27

Keywords

  • indebtedness,
  • EBITDA margin,
  • MILA,
  • IFRS 16,
  • debt ratio,
  • profitability
    • ...More
    Less

How to Cite

Varona-Calle, W. A., Calle-Zegarra, G. L., & Farfán-Manrique, M. J. (2024). The effect of IFRS 16 on financial indicators of profitability and indebtedness. CAPIC REVIEW, 22. https://doi.org/10.35928/cr.vol22.2024.223

Copyright (c) 2024 Wilvelder Alejandro Varona-Calle, George Luis Calle-Zegarra, María Jesús Farfán-Manrique

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Abstract

Businessmen evaluate the performance of their business management decision making using financial indicators. These indicators may have variations due to regulatory changes. The International Accounting Standards Board changed the accounting treatment of leases by issuing IFRS 16, which has been applied since 2019.
This study was conducted on retail, construction, real estate and mining companies listed in the Latin American Integrated Market (MILA), with the objective of evaluating the effect of IFRS 16 on the financial indicators of profitability and indebtedness.
To carry out this evaluation, the content of the financial statements for the year 2022, which are published in the official websites of the financial market supervisory entities of each MILA country, was analyzed. In total, information from fifty-nine companies was used to evaluate the relationship between the effect of IFRS 16 on profitability and indebtedness using a correlation test.
The results show that there is a direct proportional relationship between the effect of IFRS 16 application on profitability and indebtedness. This study expands the literature on the effects of IFRS 16 on financial indicators.

PDF (Español (España))

Downloads

Download data is not yet available.

References

  1. Alcalde, A., Fávero, L. P. L., y Takamatsu, R. T. (2013). Ebitda margin in Brazilian companies variance decomposition and hierarchical effects. Contaduría y administración, 58(2), 197-220. https://doi.org/10.1016/S0186-1042(13)71215-4
  2. Arhinful, R. y Radmehr, M. (2023). The effect of financial leverage on financial performance: evidence from non-financial institutions listed on the Tokyo stock market. Journal of Capital Markets Studies, Vol. 7 No. 1, pp. 53-71. https://doi.org/10.1108/JCMS-10-2022-0038
  3. Barral, A.; Cordobés, M. y Ramírez, J. N. (2014). Los arrendamientos operativos: Impacto de su reconocimiento en los estados financieros y en la política de financiación de las compañías españolas y del Reino Unido. Revista de Contabilidad, 17(2), 212-223. https://doi.org/10.1016/j.rcsar.2014.08.001
  4. Barros, V., Guedes, M. J., Santos, J., y Sarmento, J. M. (2023). Shareholder activism and firms’ performance. Research in International Business and Finance, 64, 101860. https://doi.org/10.1016/j.ribaf.2022.101860
  5. Beckman, J. K. y Jervis, K. (2009). The FASB-IASB lease accounting project: implications for the construction industry. Construction Accounting and Taxation, 19(2), 30-35.
  6. Card, D. (noviembre, 2021). Design‐Based Research in Empirical Microeconomics [Nobel Memorial Lecture]. Estocolmo, Suecia. https://davidcard.berkeley.edu/papers/CardNobelLecture.pdf
  7. Card, D. y Giuliano, L. (2016). Universal screening increases the representation of low-income and minority students in gifted education. Proceedings of the National Academy of Sciences of the United States of America, 113 (48) 13678-13683. https://doi.org/10.1073/pnas.1605043113.
  8. Conexión ESAN. (11 julio de 2019). ¿Qué es el arrendamiento de empresa y cuáles son sus beneficios? https://www.esan.edu.pe/conexion-esan/que-es-el-arrendamiento-de-empresa-y-cuales-son-sus-beneficios
  9. Corporate Finance Institute. (10 de mayo de 2023a). EBITDA Margin. https://corporatefinanceinstitute.com/resources/valuation/ebitda-margin/
  10. Corporate Finance Institute. (10 de mayo de 2023b). Leverage Ratios. https://corporatefinanceinstitute.com/resources/accounting/leverage-ratios/
  11. Currie,J., Mueller-Smith, M. y Rossin-Slater, M. (2022). Violence While in Utero: The Impact of Assaults during Pregnancy on Birth Outcomes. The Review of Economics and Statistics; 104 (3): 525–540. doi: https://doi.org/10.1162/rest_a_00965
  12. Daruwala, Z. (2023). Influence of Financial Leverage on Corporate Profitability: Does it Really Matter? International Journal of Economics and Financial Issues, 13(4), 37–46. https://doi.org/10.32479/ijefi.14461
  13. Ernst & Young. (22 de enero de2020). Guía de negocios e inversiones de la alianza del pacífico 2018/2019. https://www.ey.com/es_pe/entrepreneurship/guia-de-la-alianza-del-pacifico-2018-2019#:~:text=Considerada%20como%20unidad%20econ%C3%B3mica%2C%20la,Am%C3%A9rica%20Latina%20y%20el%20Caribe
  14. Goodacre, A. (2003). Operating lease finance in the UK retail sector. The International Review of Retail, Distribution and Consumer Research, 13(1), 99-125. https://doi.org/10.1080/095939603200006537
  15. Garcilazo, G. J. (2020). NIIF 16: Impacto en estados contables e indicadores financieros de empresas argentinas. (Trabajo final de Grado, Universidad Siglo 21). Repositorio Académico de la Universidad Argentina Siglo 21 https://repositorio.uesiglo21.edu.ar/bitstream/handle/ues21/18693/GARCILAZO_Guillermo_cuartaentrega%20-%20Guillermo.pdf?sequence=1&isAllowed=y
  16. Imhoff, E.A., Lipe, R.C., & Wright, D.W. (1991). Operating leases: impact of constructive capitalization. Accounting Horizons, 5(1), 51-63.
  17. International Accounting Standards Board. (2016). Arrendamientos (NIIF 16). https://www.ifrs.org/issued-standards/list-of-standards/ifrs-16-leases/
  18. International Accounting Standards Board. (2020). Covid-19-Related Rent Concessions.https://www.ifrs.org/content/dam/ifrs/project/ifrs-16-covid-19/covid-19-related-rent-concessions-amendment-to-ifrs-16.pdf
  19. International Accounting Standards Board. (2021). Covid-19-Related Rent Concessions beyond 30 June 2021. https://www.ifrs.org/content/dam/ifrs/publications/amendments/english/2021/covid-19-related-rent-concessions-beyond-30-june-2021-amendments-to-ifrs-16-unaccompanied.pdf
  20. IFRS Foundation. (January 2016). Effects Analysis IFRS 16 Leases. https://www.ifrs.org/content/dam/ifrs/project/leases/ifrs/published-documents/ifrs16-effects-analysis.pdf
  21. Ma, M. y Wayne, T. (2023). Economic consequences of operating lease recognition. Journal of Accounting and Economics, 75(2-3), 101566. https://doi.org/10.1016/j.jacceco.2022.101566
  22. Matsoma, N. L. (2022). The Nexus between Financial Leverage and Profitability: Evidence From Top-40 Johannesburg Security Exchange (JSE) Listed Companies. Acta Universitatis Danubius. Œconomica, 18(5). Retrieved from https://dj.univ-danubius.ro/index.php/AUDOE/article/view/1932
  23. Morales-Díaz, J y Zamora-Ramírez, C. (2018). The Impact of IFRS 16 on Key Financial Ratios: A New Methodological Approach. Accounting in Europe, 15(1), 105-133. https://doi.org/10.1080/17449480.2018.1433307
  24. Mulford, C. W. y Gram, M. (2007). The Effects of Lease Capitalization on Various Financial Measures: An Analysis of the retail Industry. Journal of Applied Research in Accounting and Finance, 2(2), 3-13. https://papers.ssrn.com/abstract=1090463
  25. Núñez, I.E. (2021). Análisis del impacto en la aplicación de la NIIIF 16 en empresas peruanas y chilenas. [Tesis para optar al grado de Magíster en contabilidad, Universidad de Chile]. Repositorio Académico de la Universidad de Chile http://repositorio.uchile.cl/handle/2250/179337
  26. Nuryani, N., Heng, T. T., y Juliesta, N. (2015). Capitalization of Operating Lease and Its Impact on Firm's Financial Ratios. Procedia-Social and Behavioral Sciences, 211, 268-276. https://doi.org/10.1016/j.sbspro.2015.11.034
  27. Pardo, F. y Giner, B. (2018). The capitalization of operating leases: Analysis of the impact on the IBEX 35 companies. Intangible Capital, 14(3), 445-483. https://doi.org/10.3926/ic.1168
  28. Pearson, K. (1900). X. On the criterion that a given system of deviations from the probable in the case of a correlated system of variables is such that it can be reasonably supposed to have arisen from random sampling. The London, Edinburgh, and Dublin Philosophical Magazine and Journal of Science, 50(302), 157-175.
  29. Price Waterhouse Coopers. (octubre 2018). NIIF 16 Arrendamientos ¿Esta su empresa preparada? https://www.pwc.com/ve/es/publicaciones/assets/PublicacionesNew/Boletines/Alerta_Tecnica_NIIF16_Arrendamientos_Oct2018.pdf
  30. Spearman, C. (1904). 'General intelligence,' objectively determined and measured. The American Journal of Psychology, 15(2), 201–293. https://doi.org/10.2307/1412107
  31. Shapiro, S y Wilk, M (1965). An Analysis of Variance Test for Normality (Complete Samples).
  32. Biometrika, Vol. 52, No. 3/4, 591-611. https://doi.org/10.2307/2333709
  33. Ulloa, A (2017). Temas de diálogo y acción regional: Minería en los países de la Alianza del Pacífico (Nota técnica BID n°1383). Banco Interamericano de Desarrollo. http://dx.doi.org/10.18235/0001007
  34. Vadillo Conesa, C. (2019). NIIF 16 Arrendamientos. Un estudio de su posible impacto y de la información divulgada sobre el mismo [Tesis de maestría, Universitat Politécnica de Valencia]. http://hdl.handle.net/10251/114919
  35. Valera Moreno, R. & Tresierra Tanaka A. (2017). Finanzas Operativas. Universidad de Piura.

CHILEAN UNIVERSITIES

FOREIGN UNIVERSITIES

Code under GNU license: OJS PKP