IFRS Adoption by UK Unlisted Firms: Subsidiary- Versus Group-Level Incentives

41 Pages Posted: 24 Feb 2019

See all articles by Paul André

Paul André

HEC Lausanne

Fani Kalogirou

UCP-Católica Lisbon School of Business and Economics

Date Written: February 7, 2019

Abstract

We examine the subsidiary- and group-level determinants of IFRS adoption by unlisted UK firms. Many unlisted firms are part of large conglomerate groups. For these firms, decisions about reporting practices are expected to be made at the group-level. Consistent with this hypothesis, we find that subsidiaries adopt IFRS as part of their group’s strategy to improve within group monitoring and raise external debt capital. ROC curve analysis indicates that these incentives are more important than traditional subsidiary-level incentives studied before. Further, we find that adopting subsidiaries benefit from better accounting quality and higher investment efficiency.

Keywords: Financial Reporting, IFRS, Business Groups, Unlisted Firms, Private Firms, Accounting Quality, Investment Efficiency

JEL Classification: F23, G1, M41

Suggested Citation

Andre, Paul and Kalogirou, Fani, IFRS Adoption by UK Unlisted Firms: Subsidiary- Versus Group-Level Incentives (February 7, 2019). Available at SSRN: https://ssrn.com/abstract=3330644 or http://dx.doi.org/10.2139/ssrn.3330644

Paul Andre (Contact Author)

HEC Lausanne ( email )

UNIL-Dorigny
Anthropole
Lausanne, 1015
Switzerland

Fani Kalogirou

UCP-Católica Lisbon School of Business and Economics ( email )

Palma de Cima
Lisboa, 1649-023
Portugal

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