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Accounting Integration and Comparability: Evidence from Relative Performance Evaluation Around IFRS Adoption

47 Pages Posted: 30 Jul 2010  

Joanna Shuang Wu

University of Rochester - Simon Business School

Ivy Zhang

University of Minnesota - Twin Cities

Date Written: July 29, 2010

Abstract

We study a sample of Continental European firms for changes in the sensitivity of their CEO turnover to their foreign peers’ accounting performance around the mandatory adoption of International Financial Reporting Standards (IFRS). We find a post-adoption increase in the use of Relative Performance Evaluation (RPE) based on foreign peers’ accounting information, consistent with greater financial reporting comparability associated with mandatory IFRS adoption. These findings cannot be explained by changes in foreign ownership or changes in foreign operations around mandatory IFRS adoption. Furthermore, we find stronger results for firms in more competitive industries and when peers are from highly correlated economies, consistent with the economic theory of RPE.

JEL Classification: M41, M44, M47

Suggested Citation

Wu, Joanna Shuang and Zhang, Ivy, Accounting Integration and Comparability: Evidence from Relative Performance Evaluation Around IFRS Adoption (July 29, 2010). Simon School Working Paper No. FR 10-25. Available at SSRN: https://ssrn.com/abstract=1650782 or http://dx.doi.org/10.2139/ssrn.1650782

Joanna Shuang Wu (Contact Author)

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

University of Minnesota - Twin Cities ( email )

19th Avenue South
Minneapolis, MN 55455
United States

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