Mandatory IFRS Adoption and Institutional Investment Decisions

Florou, Annita; Pope, Peter F.

doi:10.2139/ssrn.1362564

Cited by 155 publications

(32 citation statements)

References 29 publications

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“…These results are in line with other studies examining the conditional IFRS effects on country-level accounting differences (Daske et al 2008;Florou and Pope 2012;Ball et al 2014) and provide further support to our inferences.…”

Section: Differences Between Local Gaap and Ifrssupporting

confidence: 93%

“…Therefore we first consider whether the observed IFRS-related debt market changes depend on the extent of the accounting changes necessary to move from local GAAP standards to IFRS reporting. We expect the debt financing effects to be stronger in countries with more substantial accounting differences (e.g., Florou and Pope 2012;Ball et al 2014). Consistent with our predictions, we find evidence that the propensity to issue Does mandatory IFRS adoption facilitate debt financing?…”

Section: Introductionsupporting

confidence: 83%

“…Our tests show the presence of debt market changes even for first-time IFRS adopters in EU countries that experienced no contemporaneous enforcement or other institutional reforms. However, consistent with prior studies (e.g., Florou and Pope 2012), we also show that mandatory IFRS adopters from non-EU countries do not experience any debt market changes; therefore, we cannot rule out the potential influences of other concurrent institutional changes. Lastly in line with Ball et al (2014) and contrary to IFRS studies focusing on equity markets, we provide evidence that the documented debt financing effects do not vary across EU countries as a function of the strength of their enforcement regime.…”

Section: Introductionsupporting

confidence: 73%

“…In line with these expectations, prior IFRS research focuses on equity markets and reports reduced cost of equity and increased institutional holdings for mandatory IFRS adopters after adoption (Daske et al 2008;Li 2010;Florou and Pope 2012). We focus on debt markets and explore the debt financing consequences around mandatory IFRS adoption.…”

Section: Introductionmentioning

confidence: 93%

“…This implies how complex these dynamics are for voluntary adopters. For example,Florou and Pope (2012) report different quarterly incremental institutional holding changes around mandatory IFRS adoption between voluntary and first-time adopters. Similarly,Daske et al (2008) find a larger decline in the cost of equity for voluntary than first-time adopters when IFRS financial reporting becomes mandatory Li (2010),.…”

mentioning

confidence: 99%

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Does mandatory IFRS adoption facilitate debt financing?

2015

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We examine whether the mandated introduction of International Financial Reporting Standards (IFRS) is associated with the propensity to access the public rather than private debt market and the cost of debt. We use a global sample of public bonds and private loans and find that mandatory IFRS adopters are more likely, post-IFRS, to issue bonds than to borrow privately. We also find that mandatory IFRS adopters pay lower bond yield spreads, but not lower loan spreads, after the mandate. These findings are consistent with debt providers responding positively to financial reporting of higher quality and comparability, but only when there is a greater reliance on publicly available financial statements than private communication. Lastly, we document that the observed debt market benefits are concentrated in countries with larger differences between domestic GAAP and IFRS and are present even for EU countries that did not experience concurrent financial reporting enforcement or other institutional reforms. Overall, our study documents positive economic consequences around the mandated IFRS adoption for corporate debt financing and, in particular, for bond financing.Keywords Accounting regulation Á IFRS Á Accounting quality Á Public and private debt markets Á Cost of debt

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Section: Differences Between Local Gaap and Ifrssupporting

confidence: 93%

Section: Introductionsupporting

confidence: 83%

Section: Introductionsupporting

confidence: 73%

Section: Introductionmentioning

confidence: 93%

mentioning

confidence: 99%

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Does mandatory IFRS adoption facilitate debt financing?

2015

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International financial reporting standards, domestic debt finance and institutional quality: Evidence from developing countries

Tawiah

Gyapong

2021

Int. J Fin Econ

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We have examined the relationship between international financial reporting standards (IFRS and IFRS for SMEs) and domestic credit to the private sector by banks. Using data on 107 developing countries from 2000 to 2017, we found that the use of IFRS and IFRS for SMEs is positively associated with an increase in domestic credit to the private sector in developing countries. Our analysis on the individual global standards shows that the relationship is much stronger for the use of full IFRS than IFRS for SMEs. We found that the effect of both international standards on domestic credit is more profound in countries with weaker institutional quality, indicating the overwhelming support that these sets of international standards are quality standards that boost confidence in financial statements. Other robustness tests confirm our results.

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The impact of International Financial Reporting Standards adoption on the integration of capital markets

Zahid

Şımga-Muğan

2022

Int. J Fin Econ

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Integrated capital markets provide better risk sharing and market efficiency, but presence of different barriers such as information asymmetry across borders hinders these benefits. This study investigates whether the adoption of International Financial Reporting Standards (IFRS) (uniform accounting standards) impacts the integration of worldwide capital markets by decreasing financial information frictions. Staggered adoption dates with price‐based measures (Beta and Sigma Convergence) of integration are used to measure the incremental impact of IFRS adoption on integration. The sample includes all the countries with capital markets that have benchmark indices and price data available. Overall statistical results suggest no significant impact of IFRS adoption on capital market integration.

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Mandatory IFRS Adoption and Institutional Investment Decisions

Cited by 155 publications

References 29 publications

Does mandatory IFRS adoption facilitate debt financing?

Does mandatory IFRS adoption facilitate debt financing?

International financial reporting standards, domestic debt finance and institutional quality: Evidence from developing countries

The impact of International Financial Reporting Standards adoption on the integration of capital markets

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