A Review of the IFRS Adoption Literature

118 Pages Posted: 24 Sep 2015 Last revised: 29 May 2016

See all articles by Emmanuel T. De George

Emmanuel T. De George

University of Miami - Department of Accounting

Xi Li

London School of Economics

Lakshmanan Shivakumar

London Business School

Date Written: May 2016


This paper reviews the literature on the effects of IFRS adoption. It aims to provide a cohesive picture of empirical archival literature on how IFRS adoption affects: financial reporting quality, capital markets, corporate decision making, stewardship and governance, debt contracting, and auditing. In addition, we also present discussion of studies that focus on specific attributes of IFRS, and also provide detailed discussion of research design choices and empirical issues researchers face when evaluating IFRS adoption effects.

We broadly summarize the development of the IFRS literature as follows: The majority of early studies paint IFRS as bringing significant benefits to adopting firms and countries in terms of (i) improved transparency, (ii) lower costs of capital, (iii) improved cross-country investments, (iv) better comparability of financial reports, and (v) increased following by foreign analysts. However, these documented benefits tended to vary significantly across firms and countries. More recent studies now attribute at least some of the earlier documented benefits to factors other than adoption of new accounting standards per se, such as enforcement changes. Other recent studies examining the effects of IFRS on the inclusion of accounting numbers in formal contracts point out that IFRS has lowered the contractibility of accounting numbers. Finally, we observe substantial variation in empirical designs across papers which makes it difficult to reconcile differences in their conclusions.

Keywords: IFRS, Review, international accounting

JEL Classification: M41; G14; G39

Suggested Citation

De George, Emmanuel T. and Li, Xi and Shivakumar, Lakshmanan, A Review of the IFRS Adoption Literature (May 2016). Review of Accounting Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2664475 or http://dx.doi.org/10.2139/ssrn.2664475

Emmanuel T. De George (Contact Author)

University of Miami - Department of Accounting ( email )

Coral Gables, FL 33146-6531
United States
305-284-2273 (Phone)

Xi Li

London School of Economics ( email )

Department of Accounting
Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://www.lse.ac.uk/accounting/people/xi-li

Lakshmanan Shivakumar

London Business School ( email )

Regent's Park
London, NW1 4SA
United Kingdom
+44 20 7000 8115 (Phone)
+44 20 7000 8101 (Fax)

HOME PAGE: http://faculty.london.edu/lshivakumar/

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