47 Pages Posted: 30 Jul 2010
Date Written: July 29, 2010
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: 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