The Voluntary Adoption of Internationally Recognized Accounting Standards and Firm Internal Performance Evaluation

Wu, Joanna S.; Zhang, Ivy

doi:10.2139/ssrn.1086699

The Voluntary Adoption of Internationally Recognized Accounting Standards and Firm Internal Performance Evaluation

The Accounting Review, Forthcoming

44 Pages Posted: 23 Jan 2008 Last revised: 26 Feb 2009

Joanna S. Wu

University of Rochester - Simon Business School

Ivy Zhang

University of Minnesota - Twin Cities

Date Written: January 10, 2009

Abstract

A large body of research is devoted to understanding the causes and consequences of firms' adoption of international accounting standards. Thus far, researchers' attention has focused almost exclusively on the informational benefits of the adoption. We extend the existing literature by offering a different, stewardship perspective. We hypothesize that the voluntary adoption of international accounting standards is associated with changes in the firm internal performance evaluation process; in particular, it is associated with increases in the sensitivities of CEO turnover and employee layoffs to accounting earnings. Our results are consistent with these predictions.

Keywords: international accounting standards, performance evaluation, CEO turnover, layoffs

JEL Classification: J20, J30, G34, M41, M44, O52

Suggested Citation: Suggested Citation

Wu, Joanna and Zhang, Ivy, The Voluntary Adoption of Internationally Recognized Accounting Standards and Firm Internal Performance Evaluation (January 10, 2009). The Accounting Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1086699 or http://dx.doi.org/10.2139/ssrn.1086699