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http://ssrn.com/abstract=1005364
 
 

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Economic Consequences of the First-Time IFRS Introduction in Europe


Petya Platikanova


ESADE - Ramon Llull University

Jordi Perramon


Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

July 1, 2009


Abstract:     
Advocates of mandatory IFRS adoption claim that IFRS increases financial statement comparability and enhances the quality of financial disclosure, which in turn leads to more liquid markets. Using first-time disclosure (IFRS restatements), this study tests empirically this assertion by examining whether IFRS adoption by representative European countries results in more liquid markets. We propose that IFRS introduction can directly affect market liquidity by improving comparability. Our findings suggest that, at the industry level, larger restatements in net income increase uncertainty among investors, and by extension stock illiquidity. For industries with fewer restating peers, lack of information comparability additionally suppresses investment activities with larger liquidity costs.

Number of Pages in PDF File: 37

Keywords: accounting reconcilations, IFRS, market liquidity

JEL Classification: M41, M44, M47, G15, G14

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Date posted: August 9, 2007 ; Last revised: October 12, 2012

Suggested Citation

Platikanova, Petya and Perramon, Jordi, Economic Consequences of the First-Time IFRS Introduction in Europe (July 1, 2009). Available at SSRN: http://ssrn.com/abstract=1005364 or http://dx.doi.org/10.2139/ssrn.1005364

Contact Information

Petya Platikanova (Contact Author)
ESADE - Ramon Llull University ( email )
Avenguda de Pedralbes 60
Barcelona, 08034
Spain
Jordi Perramon
Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )
Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
3493 542-1753 (Phone)
3493 542-1746 (Fax)
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