IFRS reporting, firm-specific information flows, and institutional environments : International evidence

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review

53 Scopus Citations
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Original languageEnglish
Pages (from-to)474-517
Journal / PublicationReview of Accounting Studies
Volume17
Issue number3
Publication statusPublished - Sep 2012

Abstract

This study investigates whether and how a firm's voluntary adoption of International Financial Reporting Standards (IFRS) influences the extent to which firm-specific information is capitalized into stock prices measured by stock price synchronicity. We also study the role of analyst following and institutional environments in determining the relation between IFRS reporting and synchronicity. Using firm-level data from 34 countries, we find that synchronicity is significantly lower for IFRS adopters than for non-adopters across all regression specifications and that for IFRS adopters it decreases from the pre-adoption period to the post-adoption period. This finding supports the view that voluntary IFRS adoption facilitates the incorporation of firm-specific information into stock prices, thereby reducing synchronicity. We also find that the synchronicity-reducing effect of IFRS adoption is attenuated (accentuated) for firms with high (low) analyst following and is stronger (weaker) for firms in countries with poor (good) institutional environments. © 2012 Springer Science+Business Media, LLC.

Research Area(s)

  • Analyst coverage, Firm-specific information flows, Institutional environment, International Financial Reporting Standards (IFRS)