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Effects of Inflation Accounting on Financial Ratios: An Empirical Analysis of Non-Financial Firms Listed on Istanbul Stock Exchange

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  • Nalan Akdogan
  • Rafet Aktas
  • Seyfettin Unal

Abstract

The study analyzes the effects of recently introduced practice of inflation accounting in Turkey. Despite a relatively long history of discussions on the subject, inflation accounting was adapted in the Turkish accounting practice only recently. Therefore, this created an opportunity to examine the results of implementation and to make meaningful comparisons between historical and inflation-adjusted financial statements of firms. An analysis of t-test on the means of financial ratios has been conducted on non-financial firms listed on Istanbul Stock Exchange (ISE). The results reveal that a statistically significant change for the whole sample occurs only on Total Assets Turnover (TAT). Regarding the industry-specific outcomes, significant changes are observed in non-metallic mineral products industry for total assets turnover and debt ratio. On the whole, the study provides useful insights from the industrial point of view and carries important implications for firms from different industries, as well as financial analysts.

Suggested Citation

  • Nalan Akdogan & Rafet Aktas & Seyfettin Unal, 2009. "Effects of Inflation Accounting on Financial Ratios: An Empirical Analysis of Non-Financial Firms Listed on Istanbul Stock Exchange," The IUP Journal of Accounting Research and Audit Practices, IUP Publications, vol. 0(2), pages 47-62, April.
    • Handle: RePEc:icf:icfjar:v:08:y:2009:i:2:p:47-62
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