Assessing the Influence of International Financial Reporting Standards (IFRS) Adoption on Financial Transparency and Investor Confidence

Abstract

This systematic literature review synthesizes evidence on the association between International Financial Reporting Standards (IFRS) adoption and two outcome domains: financial transparency and financial reporting quality, and investor confidence and capital-market outcomes. The review draws on 41 empirical, conceptual, and review-based studies across multiple institutional and geopolitical contexts. The assessment focuses on empirical evidence indicating that IFRS implementation is frequently associated with improvements in financial reporting quality, especially in terms of comparability and transparency. The reviewed literature also suggests that these reporting improvements may support investor confidence and capital-market development, although the magnitude and consistency of these associations vary across institutional settings. Evidence further indicates that IFRS-related benefits are conditional on regulatory enforcement, institutional quality, corporate governance, organizational readiness, and regional stability. Barriers such as limited professional capacity, technical complexity, training costs, and geopolitical uncertainty can restrict reform effectiveness, particularly in developing and conflict-affected economies. The review contributes by integrating reporting and investor-facing outcomes, highlighting boundary conditions that explain divergent findings, and identifying future research gaps related to non-financial metrics, ESG reporting, longitudinal effects, and IFRS adoption in unstable institutional contexts. The paper concludes that IFRS adoption can support global financial harmonization, but its benefits depend on complementary institutions, effective enforcement, and local contextual fit.