Effects on Comparability and Capital Market Benefits of Voluntary IFRS Adoption

54 Pages Posted: 4 Jan 2013 Last revised: 11 Jan 2018

See all articles by Mary E. Barth

Mary E. Barth

Stanford University - Graduate School of Business

Wayne R. Landsman

University of North Carolina Kenan-Flagler Business School

Mark H. Lang

University of North Carolina at Chapel Hill

Christopher D. Williams

University of Michigan, Stephen M. Ross School of Business

Date Written: January 11, 2018

Abstract

This study addresses whether voluntary IFRS adoption is associated with increased comparability of accounting amounts and capital market benefits. We find that after firms voluntarily adopt IFRS (“adopting” firms), their accounting amounts are more comparable to those of firms that previously adopted IFRS (“adopted” firms) and less comparable to those of firms that apply domestic standards (“non-adopting” firms). Adopting firms exhibit increased liquidity, share turnover, and firm-specific information relative to adopted and non-adopting firms. Neither adopted nor non-adopting firms suffer capital market consequences. Adopting firms with higher comparability with adopted firms have greater capital market benefits after adopting IFRS than adopting firms with lower comparability, and capital market benefits for adopting firms in countries with a relatively high percentage of firms that apply IFRS enjoy greater capital market benefits.

Keywords: Comparability, IFRS, Liquidity, Synchronicity, Trading Volume, Voluntary IFRS Adoption

Suggested Citation

Barth, Mary E. and Landsman, Wayne R. and Lang, Mark H. and Williams, Christopher D., Effects on Comparability and Capital Market Benefits of Voluntary IFRS Adoption (January 11, 2018). Rock Center for Corporate Governance at Stanford University Working Paper No. 133. Available at SSRN: https://ssrn.com/abstract=2196247 or http://dx.doi.org/10.2139/ssrn.2196247

Mary E. Barth (Contact Author)

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-9040 (Phone)
650-725-0468 (Fax)

Wayne R. Landsman

University of North Carolina Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-3221 (Phone)
919-962-4727 (Fax)

Mark H. Lang

University of North Carolina at Chapel Hill ( email )

Kenan-Flagler Business School
McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-1644 (Phone)
919-962-4727 (Fax)

Christopher D. Williams

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
(734)647-2842 (Phone)

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