Analysis of Characteristics Motivating Firms’ IFRS Adoption: Evidence from the European Union

58 Pages Posted: 14 Oct 2009 Last revised: 7 Mar 2011

See all articles by Victoria Krivogorsky

Victoria Krivogorsky

San Diego State University

Jui-Chin Chang

Texas A&M International University

Ervin L. Black

Steed School of Accounting

Date Written: March 3, 2010

Abstract

We examine firm characteristics of early adoption of international financial reporting standards (IFRS) including company’s value, business complexity, corporate governance characteristics, and national levels of bureaucratic formalities in business. Because early adopters benefit from a positive network effect, they represent a driving force in harmonization and convergence. Therefore, we identify how a company’s characteristics impact its decision for early IFRS adoption. We test three groups of firms: those that adopted IFRS before the mandatory date; those that adopted IFRS on that date; and those that postponed IFRS adoption. We provide evidence, that firms’ business complexity, value, and choice of an auditor have a significant impact on early IFRS adoption. We also document that the extenuating effects of jurisdictions and national levels of bureaucratic formalities in business are factors that affect the decision to adopt IFRS.

Keywords: Accounting harmonization, firms’ value, business complexity, corporate governance

JEL Classification: M44, M41

Suggested Citation

Krivogorsky, Victoria and Chang, Jui-Chin and Black, Ervin L., Analysis of Characteristics Motivating Firms’ IFRS Adoption: Evidence from the European Union (March 3, 2010). Available at SSRN: https://ssrn.com/abstract=1488336 or http://dx.doi.org/10.2139/ssrn.1488336

Victoria Krivogorsky (Contact Author)

San Diego State University ( email )

San Diego, CA 92182-0763
United States

Jui-Chin Chang

Texas A&M International University ( email )

Texas
United States
956-326-2501 (Phone)

Ervin L. Black

Steed School of Accounting ( email )

307 W Brooks
Norman, OK 73019
United States
405-325-2401 (Phone)

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