Abstract

http://ssrn.com/abstract=1458944
 
 

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How do Individual Investors React to Global IFRS Adoption?


Ulf Brüggemann


Humboldt University of Berlin - School of Business and Economics

Holger Daske


University of Mannheim

Carsten Homburg


University of Cologne

Peter F. Pope


London School of Economics

August 1, 2012

AAA 2010 Financial Accounting and Reporting Section (FARS) Paper

Abstract:     
We examine the impact of global IFRS adoption on cross-border equity investments by individual investors. Our proxy for cross-border equity investments is trading volume in the Open Market at Frankfurt Stock Exchange. The Open Market is a segment designed for German individual investors to trade a large selection of foreign stocks. Using a sample of 5,637 firms from 31 countries around the world, we find that stocks experience a significant increase in Open Market trading volume following mandatory adoption of IFRS. This effect is more pronounced for attention-grabbing stocks (e.g., stocks experiencing an increase in media coverage following IFRS adoption). Our results suggest that global IFRS adoption enhances cross-border equity investments by individual investors. However, this effect does not materialize equally across stocks due individual investors’ limited attention.

Number of Pages in PDF File: 52

Keywords: Individual Investors, International Accounting, IFRS, Open Market, Cross-Border Investments

JEL Classification: G14, G38, K22, M41, M48

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Date posted: August 22, 2009 ; Last revised: August 2, 2012

Suggested Citation

Brüggemann, Ulf and Daske, Holger and Homburg, Carsten and Pope, Peter F., How do Individual Investors React to Global IFRS Adoption? (August 1, 2012). AAA 2010 Financial Accounting and Reporting Section (FARS) Paper. Available at SSRN: http://ssrn.com/abstract=1458944 or http://dx.doi.org/10.2139/ssrn.1458944

Contact Information

Ulf Brüggemann (Contact Author)
Humboldt University of Berlin - School of Business and Economics ( email )
Spandauer Str. 1
Berlin, D-10099
Germany
Holger Daske
University of Mannheim ( email )
Schloss Ostflügel
Raum O 250
Mannheim, D-68131
Germany
Carsten Homburg
University of Cologne ( email )
Albertus-Magnus-Platz
Cologne, 50923
Germany
Peter F. Pope
London School of Economics ( email )
Houghton Street
London, WC2A 2AE
United Kingdom
HOME PAGE: http://www.lse.ac.uk/accounting/facultyAndStaff/profiles/Pope.aspx
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