The voluntary adoption of International Financial Reporting Standards and loan contracting around the world

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

86 Scopus Citations
View graph of relations


Related Research Unit(s)


Original languageEnglish
Pages (from-to)779-811
Journal / PublicationReview of Accounting Studies
Issue number4
Publication statusPublished - Dec 2011


Using a sample of non-U. S. borrowers from 40 countries during 1997 through 2005, this paper investigates the effect of the voluntary adoption of International Financial Reporting Standards (IFRS) on price and nonprice terms of loan contracts and loan ownership structure in the international loan market. Our results reveal the following. First, banks charge lower loan rates to IFRS adopters than to non-adopters. The difference in loan rates in excess of a benchmark rate between the two groups is about 20 basis points for all loans and nearly 31 basis points for London Interbank Offered Rate (LIBOR)-based loans. Second, banks impose more favorable nonprice terms on IFRS adopters, particularly less restrictive covenants. We also provide evidence suggesting that banks are more willing to extend credit to IFRS adopters through larger loans and longer maturities. Finally, IFRS adopters attract significantly more foreign lenders participating in loan syndicates than non-adopters. © 2011 Springer Science+Business Media, LLC.

Research Area(s)

  • Collateral, Debt covenant, Foreign banks, International Financial Reporting Standards (IFRS), Loan spread, Syndicate structure