IFRS Is Already Influencing Investment Decisions in Europe, Reveals Fund Managers Survey
9 February 2006 - Information provided in accordance with International Financial Reporting Standards (IFRS) is already influencing the investment decisions of more than half of fund managers in Europe, according to a ground-breaking report.
The PricewaterhouseCoopers/Ipsos MORI survey, IFRS – The European investors' view, reveals that conversion to the new standards is having a real impact on the way fund managers perceive companies and consequently the investment decisions they make. The PricewaterhouseCoopers/Ipsos MORI survey of 187 fund managers in seven European countries shows that the overwhelming majority (79%) regard the change to IFRS as significant.
Even before the year-end financial statements have been distributed, more than half (52%) said the IFRS information reported in 2005 had directly influenced their investment decisions. 21% said that when looking at potential investments, IFRS information had influenced decisions to buy, and another 17% said that it was a factor in their decision to walk away from an investment. IFRS had a similar impact on decisions about existing investments – 22% said it had influenced them to sell a company's shares, and for 11% of fund managers it was a factor in holding onto shares.
Three-quarters believed that IFRS has been helpful in showing the financial risks that companies assume and 66% believe that they provide a clear picture of companies' operational risks. This is one of the reasons, perhaps, that nearly three-quarters (73%) of the fund managers reported that IFRS has had at least some impact on their perception of a company's value, with 27% saying it has had “a great deal” or “a fair amount”. This proportion is higher than might be expected, particularly at this stage, before the first year-end financial statements under IFRS have been reported.
“I believe that IFRS will be as important for investors in the Czech Republic as well. Furthermore, these investors will have at their disposal non-consolidated financial statements of listed companies set up according to IFRS. To understand the differences between IFRS and Czech accounting standards, all companies setting up financial statement according to IFRS must quantify all significant differences,” stated Petr Kříž, Partner in the Assurance Services department of PricewaterhouseCoopers.
According to the survey the majority of fund managers said they understood the implications of IFRS – 73% said they know a great deal or a fair amount about the new standards and 76% also felt very or fairly confident in their understanding of the impact of IFRS on the companies they invest in. However, only 12% are ‘very confident', so there is clearly still some way to go.
Whatever their levels of understanding, fund managers do appear to appreciate companies' efforts to present information under IFRS and are positive in their feedback. 81% said management teams had coped effectively and 79% found the information presented in financial statements prepared under IFRS useful.
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Notes to the editor:
- PricewaterhouseCoopers commissioned MORI research agency to conduct a survey of 187 Europe-based fund managers in the last quarter of 2005 in the following countries: Belgium, Germany, Italy, the Netherlands, Norway, Portugal and the UK . The survey was conducted by telephone and covered various issues in relation to IFRS.
- Download a copy of the report: IFRS – The European investors' view.
- PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 130,000 people in 148 countries work collaboratively using Connected Thinking to develop fresh perspectives and practical advice.
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