Product market competition, stock price informativeness, and IFRS adoption: evidence from Europe

Wang, Jing; We, Li; Forst, Arno

doi:10.1007/s11156-020-00933-6

Cited by 4 publications

(4 citation statements)

References 71 publications

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“…Downes et al (2018) find a decrease in competition and an increase in the product market share of EU public firms that are required to adopt IFRS, consistent with Financial reporting quality IFRS giving these public firms access to lower cost financing that allows them to pursue more new investments relative to private firms. Wang et al (2021) find that the mandatory adoption of IFRS in the EU mitigates the negative relation between product market competition and stock price informativeness, consistent with IFRS reducing information asymmetry. In contrast to those studies, we focus on the product market implications of financial statement comparability under IFRS and consider how this affects accounting quality.…”

Section: Introductionmentioning

confidence: 53%

“…Although a large body of literature examines the effects of mandatory IFRS adoption in terms of capital market (Brüggemann et al , 2013; Pathiranage and Jubb, 2018), the effects of IFRS adoption in product markets have received much less attention. Two exceptions are Downes et al (2018) and Wang et al (2021). Downes et al (2018) find a decrease in competition and an increase in the product market share of EU public firms that are required to adopt IFRS, consistent with IFRS giving these public firms access to lower cost financing that allows them to pursue more new investments relative to private firms.…”

Section: Introductionmentioning

confidence: 74%

“…In contrast to the European Union (EU)-based samples of Doukakis (2014), Ipino and Parbonetti (2017), Downes et al (2018) and Wang et al (2021), we focus on non-EU countries because EU countries adopted IFRS as a block in 2005. Thus, the adoption decision for EU countries was not made at the country-level and was unlikely to be related to international trade associated with IFRS-adopting outside the EU.…”

Section: Introductionmentioning

confidence: 99%

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International trade, mandatory IFRS adoption and financial reporting quality

Carvajal,

Cahan

2024

PAR

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Purpose This study examines how bilateral international trade among mandatory International Financial Reporting Standards (IFRS) adopter countries moderates the relation between IFRS adoption and firms’ financial reporting quality. Design/methodology/approach The authors use data from 2007 to 2015 and focus on publicly listed firms from non-European Union countries that adopted IFRS on a mandatory basis. Findings The authors find that the interaction between mandatory IFRS adoption and a country’s bilateral trade with other countries using IFRS is negatively and significantly related to accruals-based earnings management, which is an inverse measure of financial reporting quality. This result is driven by firms in less developed countries. The improvement in accounting quality is for firms located in countries that both fully and partially adopt IFRS. The authors also find a significant and negative coefficient for the relation between real earnings management and the interaction between mandatory IFRS adoption and a country’s bilateral trade with other IFRS countries in the post-global financial crisis period. Originality/value Overall, the authors’ results are consistent with the notion that the mandatory adoption of IFRS creates a positive externality where firms improve their accounting quality because increased financial statement comparability means that foreign customers and suppliers can monitor the quality of earnings more easily.

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Section: Introductionmentioning

confidence: 53%

Section: Introductionmentioning

confidence: 74%

Section: Introductionmentioning

confidence: 99%

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International trade, mandatory IFRS adoption and financial reporting quality

Carvajal,

Cahan

2024

PAR

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“…As stated by Rejeb and Boughrara (2013) and according to Wang, Li and Forst (2021), this would tend to increase the periods of informational efficiency in some of these markets. In this regard, we tested the following research hypotheses:…”

Section: Adaptive Markets Hypothesis (Amh)mentioning

confidence: 90%

Adaptive markets hypothesis and economic-institutional environment: a cross-country analysis

Santos

Fávero

Brugni

et al. 2023

REGE

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Purpose This study’s goal was to identify how several markets have developed over time and what determinants have influenced this process, based on adaptive markets hypothesis (AMH). In this regard, the authors consider that agents are driven by the seeking for abnormal returns to stay “alive” and their environment could somehow modify their decision-making processes, as well as influence the degree of efficiency of the market.Design/methodology/approach The authors collected the daily closing-of-the-market index from 50 countries, between 1990 and 2022. The sample includes emerging countries, developed countries and frontier markets. Then, the authors ran multilevel modeling using Hurst exponent as an informational efficiency metric estimated by two different moving windows: 500 and 1,250 observations (approximately 2 and 5 years).Findings The results indicate that the efficiency of the markets is not constant over time. The authors also have identified that markets follow a cyclical pattern of efficiency/inefficiency, and they are currently in a period of convergence to efficiency, possibly explained by the increase in computational capacity and speed of the available information to agents. In addition, this study identified that country characteristics are associated with market efficiency, considering institutional factors.Originality/value Studies of this nature contribute to the literature, considering the importance of better comprehension of market efficiency dynamics and their determinants, specially observing other theories on the relationship between information and markets (like AMH), which work with other investor assumptions than those used by efficient market hypothesis.

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IFRS Adoption and Performance of Stock Markets: A Comparative Analysis of Frontier Stock Markets in Sub‐Saharan Africa

Imhanzenobe

2024

Thunderbird Intl Bus Rev

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The International Financial Reporting Standards (IFRS) is a set of global accounting standards that tries to provide truer and fairer accounting figures by recommending more realistic measurement and recognition criteria, increasing the disclosure of relevant information, and increasing the comparability of financial statements across borders. Most of the literature on IFRS adoption addresses its impact on the value relevance of accounting figures but ignores the wider picture in terms of impact on stock market performance. The few studies that address IFRS adoption and stock market performance focus on advanced economies and lack proper theoretical underpinning. This study addresses the impact of IFRS adoption on stock market performance in Sub‐Saharan Africa. The study applied the autoregressive distributed lag model to test the research hypotheses. The Johannesburg, Nigerian, and Nairobi stock exchanges were selected as the sample markets because they constitute the major frontier markets for foreign investors wishing to penetrate the Sub‐Saharan African market. The sample period was from 1990 to 2020. The results of the study showed that IFRS adoption had a positive and significant impact on market efficiency and size for all the selected countries. IFRS adoption had a positive and significant impact on market liquidity in Kenya only. The study recommends that IFRS adopters should implement stock market policies that encourage the participation of foreign investors following the increase in financial statements comparability brought about by IFRS adoption.

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Product market competition, stock price informativeness, and IFRS adoption: evidence from Europe

Cited by 4 publications

References 71 publications

International trade, mandatory IFRS adoption and financial reporting quality

International trade, mandatory IFRS adoption and financial reporting quality

Adaptive markets hypothesis and economic-institutional environment: a cross-country analysis

IFRS Adoption and Performance of Stock Markets: A Comparative Analysis of Frontier Stock Markets in Sub‐Saharan Africa

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