Mandatory IFRS Adoption and Financial Statement Comparability

DSpace/Manakin Repository

Mandatory IFRS Adoption and Financial Statement Comparability

Citable link to this page

. . . . . .

Title: Mandatory IFRS Adoption and Financial Statement Comparability
Author: Brochet, Francois; Jagolinzer, Alan D.; Reidl, Edward J.

Note: Order does not necessarily reflect citation order of authors.

Citation: Brochet, Francois, Alan Jagolinzer, and Edward J. Riedl. "Mandatory IFRS Adoption and Financial Statement Comparability." Contemporary Accounting Research (forthcoming).
Full Text & Related Files:
Abstract: This study examines whether mandatory adoption of International Financial Reporting Standards (IFRS) leads to capital market benefits through enhanced financial statement comparability. UK domestic standards are considered very similar to IFRS (Bae et al. 2008), suggesting any capital market benefits observed for UK-domiciled firms are more likely attributable to improvements in comparability (i.e., better precision of across-firm information) than to changes in information quality specific to the firm (i.e., core information quality). If IFRS adoption improves financial statement comparability, we predict this should reduce insiders' ability to benefit from private information. Consistent with these expectations, we find that abnormal returns to insider purchases―used to proxy for private information―are reduced following IFRS adoption. Similar results obtain across numerous subsamples and proxies used to isolate IFRS effects attributable to comparability. Together, the findings are consistent with mandatory IFRS adoption improving comparability and thus leading to capital market benefits by reducing insiders' ability to exploit private information.
Terms of Use: This article is made available under the terms and conditions applicable to Open Access Policy Articles, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#OAP
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:9491451

Show full Dublin Core record

This item appears in the following Collection(s)

 
 

Search DASH


Advanced Search
 
 

Submitters