The Information Content of Annual Earnings Announcements and Mandatory Adoption of IFRS

59 Pages Posted: 4 Feb 2009 Last revised: 19 Sep 2012

See all articles by Wayne R. Landsman

Wayne R. Landsman

University of North Carolina Kenan-Flagler Business School

Edward L. Maydew

University of North Carolina at Chapel Hill

Jacob R. Thornock

Brigham Young University

Date Written: April 14, 2011

Abstract

This study examines whether the information content of earnings announcements--abnormal return volatility and abnormal trading volume -- increases in countries following mandatory IFRS adoption, and conditions and mechanisms through which increases occur. Findings suggest information content increased in 16 countries that mandated adoption of IFRS relative to 11 that maintained domestic accounting standards, although the effect of mandatory IFRS adoption depends on the strength of legal enforcement in the adopting country. Utilizing a path analysis methodology, we find evidence of three mechanisms through which IFRS adoption increases information content: reducing reporting lag, increasing analyst following, and increasing foreign investment.

Keywords: IFRS, Earnings Announcements, Information Content

JEL Classification: M41, M44, M47, K20

Suggested Citation

Landsman, Wayne R. and Maydew, Edward L. and Thornock, Jacob, The Information Content of Annual Earnings Announcements and Mandatory Adoption of IFRS (April 14, 2011). Journal of Accounting & Economics (JAE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=1337567

Wayne R. Landsman (Contact Author)

University of North Carolina Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-3221 (Phone)
919-962-4727 (Fax)

Edward L. Maydew

University of North Carolina at Chapel Hill ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States
919-843-9356 (Phone)

HOME PAGE: http://www.kenan-flagler.unc.edu/faculty/directory/accounting/edward-maydew

Jacob Thornock

Brigham Young University ( email )

Provo, UT 84602
United States
8014220828 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
2,182
Abstract Views
7,795
rank
7,021
PlumX Metrics