“…Transparency-thus the information available to investors-is low in countries with low stock market liquidity and thus high LAMBDA. The second measure is IFRS, an indicator variable that equals 1 if the country adopted IFRS and 0 otherwise (Beuselinck, Joos, Khurana, and Meulen 2017;Chan, Hsieh, Lee, and Yueh 2015;Cheng, Huang, and Li 2020;Daske, Hail, Leuz, and Verdi 2008;Gunn, Kawada, and Michas 2019). We set TRANS to 1 (0 otherwise) for firms with LAMBDA below the sample median when LAMBDA is used and TRANS to IFRS when IFRS is used.…”