Do Accounting Standards Matter for Firm Productivity? Evidence from Mandatory IFRS Adoption

43 Pages Posted: 26 Apr 2014

See all articles by Rajiv D. Banker

Rajiv D. Banker

Temple University - Department of Accounting

Rong Huang

City University of New York (CUNY) - Stan Ross Department of Accountancy

Yinghua Li

Arizona State University (ASU) - School of Accountancy

Date Written: April 22, 2014

Abstract

In this paper, we examine whether productivity improves after mandatory IFRS adoption. Using data envelopment analysis (DEA) to measure firm-level productivity, we show that production efficiency of mandatory IFRS adopters increases significantly after mandatory adoption of IFRS. The post-adoption production efficiency improves more for firms located in countries with large GAAP differences, firms exhibiting a decrease in stock return volatility and analyst forecast dispersion, and firms experiencing a large increase in the number of comparable industry peers. Taken together, the evidence suggests that firms with significant improvements in information environment from mandatory IFRS adoption are able to increase productivity substantially.

Keywords: Productivity, Data Envelopment Analysis, IFRS

JEL Classification: M41, D24

Suggested Citation

Banker, Rajiv D. and Huang, Rong and Li, Yinghua, Do Accounting Standards Matter for Firm Productivity? Evidence from Mandatory IFRS Adoption (April 22, 2014). Available at SSRN: https://ssrn.com/abstract=2429121 or http://dx.doi.org/10.2139/ssrn.2429121

Rajiv D. Banker

Temple University - Department of Accounting ( email )

Philadelphia, PA 19122
United States

Rong Huang (Contact Author)

City University of New York (CUNY) - Stan Ross Department of Accountancy ( email )

One Bernard Baruch Way, Box B12-225
New York, NY 10010
United States
(646)312-3204 (Phone)

Yinghua Li

Arizona State University (ASU) - School of Accountancy ( email )

Tempe, AZ 85287
United States
480-965-5188 (Phone)

HOME PAGE: http://wpcarey.asu.edu/people/profile/2386522

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