The EMU Integration Structure and the Spillover Dynamics Towards the IAS Harmonization

Posted: 13 Sep 2009 Last revised: 5 Dec 2014

See all articles by George Karathanassis

George Karathanassis

Athens University of Economics and Business - Department of Business Administration

Vasilios I. Sogiakas

University of Glasgow

Stella N. Spilioti

University of Piraeus - Department of Economics

Date Written: September 12, 2009

Abstract

This paper investigates the relationship between the European Monetary Union (EMU) financial markets both in the long or in the short run term, with respect to the harmonization procedure of the International Accounting Standards (IAS). According to many analysts, the IAS could possible contribute to the transparency of the transmitted information, the direct accessibility to the fundamentals of listed firms and the uniform manipulation of accounting data not only within exchanges but also between them. Based on the above, it is expected that the financial markets should react to the IAS harmonization with tighter relationships either in the expectations of their long run structure or in the transmission of new information which is expressed by the second moment dynamics. This paper examines empirically the IAS harmonization procedure in the EMU area and its impact on the relationship of the financial markets involved. By application of regime shift methodologies, the empirical findings of the paper offer evidence consistent with the hypothesis that the IAS harmonization process contributed to the informational efficiency and the transparency of long and short run expectations into financial markets, with higher degrees of interdependencies.

Keywords: Cointegration, Spillover Effects, Regime Shift

JEL Classification: C22, C52, C53, G15

Suggested Citation

Karathanassis, George and Sogiakas, Vasilios I. and Spilioti, Stella N., The EMU Integration Structure and the Spillover Dynamics Towards the IAS Harmonization (September 12, 2009). Journal of Economic Integration, Vol. 26, No. 03, 2011. Available at SSRN: https://ssrn.com/abstract=1472377

George Karathanassis

Athens University of Economics and Business - Department of Business Administration ( email )

Athens
Greece

Stella N. Spilioti

University of Piraeus - Department of Economics ( email )

Karaoli & Dimitriou 80
18534 Piraeus
Greece

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