IFRS CONVERGENCE; IMPACT ON THE ACCOUNTING INFORMATION OF PHARMACEUTICAL COMPANIES

Abstract

International Financial Reporting Standards (IFRS) have emerged as the global benchmark in financial reporting. This study examines the impact of IFRS adoption on the financial performance of pharmaceutical companies in India, a sector that has recently witnessed a surge in Foreign Direct Investment. Using a sample of fifteen listed pharmaceutical companies—five each from large-cap, mid-cap, and small-cap categories based on market capitalisation—the study investigates the effect of IFRS on key financial indicators and ratios. Secondary data were collected from financial statements over a ten-year period, comprising five years before and five years after IFRS adoption. The analysis applies the Wilcoxon Signed Rank Test, a non-parametric statistical tool, to assess changes in financial performance. The findings reveal significant differences post-IFRS adoption, particularly in revenue from operations, equity share capital, profit/loss for the period, fixed assets, and liquidity ratios such as current and quick ratios. The results suggest that IFRS convergence has had a measurable impact across companies of all sizes, including voluntary adopters like small-cap firms. Overall, the study underscores the transformative effect of IFRS on financial transparency and consistency in the Indian pharmaceutical sector.