Abstract

http://ssrn.com/abstract=1819482
 
 

References (44)



 
 

Citations (6)



 


 



Mandatory IFRS Adoption and Financial Statement Comparability


Francois Brochet


Boston University - Department of Accounting

Alan D. Jagolinzer


University of Colorado - Leeds School of Business

Edward J. Riedl


Boston University - School of Management

August 20, 2012

Contemporary Accounting Research, Forthcoming
Harvard Business School Accounting & Management Unit Working Paper No. 11-109

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.

Number of Pages in PDF File: 52

Keywords: IFRS, comparability, private information, insider trading

JEL Classification: G1, G3, M4

working papers series


Download This Paper

Date posted: April 24, 2011 ; Last revised: August 21, 2012

Suggested Citation

Brochet, Francois and Jagolinzer, Alan D. and Riedl, Edward J., Mandatory IFRS Adoption and Financial Statement Comparability (August 20, 2012). Contemporary Accounting Research, Forthcoming; Harvard Business School Accounting & Management Unit Working Paper No. 11-109. Available at SSRN: http://ssrn.com/abstract=1819482 or http://dx.doi.org/10.2139/ssrn.1819482

Contact Information

Francois Brochet (Contact Author)
Boston University - Department of Accounting ( email )
595 Commonwealth Avenue
Boston, MA 02215
United States
Alan D. Jagolinzer
University of Colorado - Leeds School of Business ( email )
419 UCB
Boulder, CO 80309-0419
United States
Edward J. Riedl
Boston University - School of Management ( email )
595 Commonwealth Avenue
Boston, MA MA 02215
United States
617-353-2317 (Phone)
Feedback to SSRN


Paper statistics
Abstract Views: 5,295
Downloads: 1,191
Download Rank: 8,488
References:  44
Citations:  6

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 0.531 seconds