Despite having an underdeveloped supporting infrastructure and limited resources Kazakhstan
was the first CIS country to require IFRS in 2004 for banks and in 2005 for all public
companies. What were the economic consequences of this important reform? In the 1990s
Kazakhstan's capital market reforms mirrored those of Russia due to the two countries'
cooperating mode driven by a high level of resource interdependence and environmental
uncertainty following the collapse of the Soviet Union. Yet by 2003 dependence on external
donors (IMF World Bank) took precedence over interdependence with Russia. As a result
Kazakhstan unilaterally proceeded with adoption of IFRS while Russia backed up from this
initiative. This study reports that Kazakhstan's inflow of Foreign Direct Investments was the
greatest among the CIS nations following the adoption of IFRS. In addition in 2005-11
Kazakhstani public firms' reporting quality was higher than that of the Russian public firms
operating in a similar environment but exempt from the IFRS reporting requirement. Kazakhstan
was the first CIS nation to repay its external debt ahead of schedule and to receive an
investment grade from Moody's rating agency. The book concludes that Western-style capital
market reforms-in this emerging market with a not-so-distant communist past-had significantly
positive outcomes.
