The IFRS, by the global establishment of the accounting standards, principles and practices, meet the requirements of the users of the financial statements and the comparability of the data of the stock exchange quoted companies. Consequently, investors have more choices in a lowest possible cost and an improvement exists in the impression of the stock markets, as it is possible to attract investors. This study investigates how the adoption affects ROA and if the earnings are more value relevant based on IFRS than based on local GAAP.
The results show a) that IFRS did not contribute in a great amount to the efficient and the cost-effective functioning on capital markets by the EU Mediterranean banks. Through these results, the conclusion is that the ROA of the banks of the European Union Mediterranean Countries was not affected by the adoption of IFRS b) It was not possible to clarify if the earnings are more value relevant based on IFRS than based on local GAAP.
Keywords: IFRS, GAAP, BANKS, ROA