Abstract

http://ssrn.com/abstract=2172014
 
 

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Mandatory Financial Reporting and Voluntary Disclosure: Evidence from Mandatory IFRS Adoption


Xi Li


Temple University - Fox School of Business and Management

Holly Yang


University of Pennsylvania - The Wharton School

February 18, 2014


Abstract:     
This study examines the effect of mandatory adoption of International Financial Reporting Standards (IFRS) on voluntary disclosure. We document a significant increase in the likelihood and frequency of management earnings forecasts following IFRS adoption. Such increase comes from both forecast revisions and new issuances. We next propose and test three channels through which IFRS adoption leads to more voluntary disclosure: confirmatory role of mandatory reporting, higher investor demand for transparency, and heightened litigation risk. We document evidence consistent with the first two channels. Lastly, we examine the role of political influence and find that stakeholders, such as labor unions, equity markets, government, and lenders, all play a role in affecting the association between IFRS adoption and management forecasts.

Number of Pages in PDF File: 55

Keywords: Mandatory reporting, Voluntary disclosure, IFRS, Management forecasts, Political influence

JEL Classification: G14, G15, K22, M41

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Date posted: November 7, 2012 ; Last revised: February 19, 2014

Suggested Citation

Li, Xi and Yang, Holly, Mandatory Financial Reporting and Voluntary Disclosure: Evidence from Mandatory IFRS Adoption (February 18, 2014). Available at SSRN: http://ssrn.com/abstract=2172014 or http://dx.doi.org/10.2139/ssrn.2172014

Contact Information

Xi Li (Contact Author)
Temple University - Fox School of Business and Management ( email )
1801 Liacouras Walk
Philadelphia, PA 19122
United States
HOME PAGE: http://astro.temple.edu/~xili/
Holly Yang
University of Pennsylvania - The Wharton School ( email )
3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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