How Badly Do Listed Firms Want to Avoid IFRS? Delisting Decisions in the Post-IFRS Adoption Period

52 Pages Posted: 24 Jan 2017

See all articles by Elizabeth F. Gutierrez

Elizabeth F. Gutierrez

Universidad de Chile

Maria Vulcheva

Florida International University

Maria Rykaczewski

Arizona State University

Date Written: January 22, 2017

Abstract

This paper provides evidence on the net effect of country-level adoption and implementation of International Financial Reporting Standards (IFRS). We use firm-years from 18 IFRS-adopting jurisdictions to examine the association between the country-level adoption of IFRS and the overall probability of delisting in the post-adoption period. We further examine how mandatory IFRS adoption relates to the probability of voluntary delistings (including delistings caused by mergers and acquisitions, privatizations, and company requests) and involuntary delistings (including delistings due to reorganization and bankruptcy filings and delistings by the exchange). We also test the association between regulatory quality and delisting in IFRS-adopting jurisdictions. Our findings indicate that the probability of delisting is higher for IFRS-adopting jurisdictions in the post-adoption period for companies delisting both voluntarily and involuntarily. We also find that the probability of delisting increases only in strong-enforcement jurisdictions, which we attribute to higher IFRS compliance costs in these jurisdictions. Our findings extend the literature on the association of accounting regulation with firms’ delisting decisions and shed light on the possible effects of IFRS adoption on stock exchange competitiveness.

Keywords: IFRS adoption, IFRS costs, delisting, regulatory quality

Suggested Citation

Gutierrez, Elizabeth F. and Vulcheva, Maria and Rykaczewski, Maria, How Badly Do Listed Firms Want to Avoid IFRS? Delisting Decisions in the Post-IFRS Adoption Period (January 22, 2017). Available at SSRN: https://ssrn.com/abstract=2903679 or http://dx.doi.org/10.2139/ssrn.2903679

Elizabeth F. Gutierrez

Universidad de Chile ( email )

Pío Nono Nº1, Providencia
Santiago, R. Metropolitana 7520421
Chile

Maria Vulcheva (Contact Author)

Florida International University ( email )

11200 SW 8 Street RB244B
Miami, FL 33199
United States

Maria Rykaczewski

Arizona State University ( email )

Tempe, AZ 85287
United States

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