Impact of international financial reporting standards on the profit and equity of AIM listed companies in the UK

• This study examines the impact of change to IFRS on the profit and equity of AIM listed companies.
• The pre- and post-IFRS regimes are examined with data from the financial statements under IFRS 1.
• We find the IFRS based profit as higher than UK profit but the difference is smaller than large firms.
• In contrast to existing evidence we only find a marginal effect of IFRS on equity of AIM companies.
• We argue that barriers to harmonisation should be realised before changing accounting regulation.

This study examines the extent to which the change from UK GAAP to IFRS has affected companies listed on the Alternative Investment Market (AIM) in the UK. The results suggest that, on average, profit reported under IFRS is higher than that reported under UK GAAP; however, the difference is much smaller for AIM listed companies as compared to what existing literature suggests for firms listed on main stock markets. The Gray's partial analysis results indicate that despite the extensive programmes for improving convergence over time there is still a considerable discrepancy between IFRS and UK GAAP.