The Effect of Mandatory IFRS Adoption on International Cross-Listings

Posted: 13 Jul 2014 Last revised: 27 Mar 2017

See all articles by Long Chen

Long Chen

George Mason University - Department of Accounting

Jeff Ng

Chinese University of Hong Kong (CUHK) - School of Accountancy

Albert Tsang

York University - Schulich School of Business

Date Written: October 24, 2014

Abstract

Using a comprehensive dataset of international cross-listings spanning 34 (50) home (target) countries, we examine whether mandatory IFRS adoption facilitates firms’ cross-listing activities. Our results using difference-in-differences analyses show that firms that mandatorily adopt IFRS exhibit significantly higher cross-listing propensity and intensity following IFRS adoption. We also find that firms from mandatory IFRS adoption countries are more likely to cross-list their securities in countries also mandating IFRS and countries with larger and more liquid capital markets. We further find that IFRS adoption has a greater effect on mandatory IFRS adopters from countries with larger accounting differences from IFRS, lower disclosure requirements and less access to external capital prior to IFRS adoption. Our findings are consistent with the notion that mandatory IFRS adoption facilitates firms’ cross-listing activities and highlight the importance of considering the change in cross-listings when examining the capital market consequences of mandatory IFRS adoption.

Keywords: Mandatory IFRS Adoption; Cross-listing; GAAP Difference

JEL Classification: F31, G15, G18, M41

Suggested Citation

Chen, Long and Ng, Jeff and Tsang, Albert, The Effect of Mandatory IFRS Adoption on International Cross-Listings (October 24, 2014). The Accounting Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2465119 or http://dx.doi.org/10.2139/ssrn.2465119

Long Chen

George Mason University - Department of Accounting ( email )

Fairfax, VA
United States

Jeff Ng

Chinese University of Hong Kong (CUHK) - School of Accountancy ( email )

Shatin, N.T.
Hong Kong
+852 39437742 (Phone)

Albert Tsang (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

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