The Adoption of Internationally Recognized Accounting Standards: Implications for the Credit Markets

49 Pages Posted: 25 Jun 2009 Last revised: 22 Sep 2009

See all articles by Joanna S. Wu

Joanna S. Wu

University of Rochester - Simon Business School

Ivy Zhang

University of California, Riverside

Date Written: June 24, 2009

Abstract

We examine whether the adoption of internationally recognized accounting standards is associated with a greater sensitivity of credit ratings to accounting information. Our results suggest that voluntary adoptions of IFRS/U.S.GAAP come with significant increases in the sensitivity of credit ratings to the accounting default factor. No such evidence is found for mandatory adoptions except in countries with stronger rules of law.

Keywords: Internationally recognized accounting standards, IFRS, credit markets, credit relevance

JEL Classification: M41, M44, M47, G33, K20

Suggested Citation

Wu, Joanna and Zhang, Ivy, The Adoption of Internationally Recognized Accounting Standards: Implications for the Credit Markets (June 24, 2009). Simon School Working Paper No. FR 09-12. Available at SSRN: https://ssrn.com/abstract=1425209 or http://dx.doi.org/10.2139/ssrn.1425209

Joanna Wu

University of Rochester - Simon Business School ( email )

Carol Simon Hall 3-160D
Rochester, NY 14627
United States
585-275-5468 (Phone)
585-442-6323 (Fax)

Ivy Zhang (Contact Author)

University of California, Riverside ( email )

900 University Ave
Riverside, CA 92521
United States

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