The economic consequences of IFRS adoption: Evidence from New Zealand

Houqe, Muhammad Nurul; Monem, Reza; Zijl, Tony van

doi:10.1016/j.intaccaudtax.2016.10.001

Cited by 34 publications

(31 citation statements)

References 37 publications

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“…F_Lev is included because an increase in the proportion of debt in a company's capital structure increases the riskiness of each unit of equity, whether viewed as systematic or as total risk (Gebhardt, Lee & Swaminathan, ). Book‐to‐market ratio ( BM ) is a proxy for firm growth and is expected to have a negative relationship with the cost of equity capital (Houqe, Monem & van Zijl, ). B_IND and F_SALES are also expected to have a negative relationship with the cost of equity capital (Azizkhani et al , ).…”

Section: Model Specificationsmentioning

confidence: 99%

Audit Quality, Earnings Management, and Cost of Equity Capital: Evidence from India

2017

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This study examines the effect of audit quality on earnings management and cost of equity capital of listed companies in India. Our results show that companies employing a high-quality auditor have a lower degree of earnings management and lower cost of equity capital. The results also show that companies belonging to business groups have a lower degree of earnings management and lower cost of equity capital than do stand-alone companies but that they benefit less from employing a high-quality auditor. Our results are based on a large sample of 7,303 firm-year observations on listed companies in India and are robust to alternative measures for our main variablesaudit quality, earnings management, and cost of capitaland to tests for endogeneity and the impact of the global financial crisis (GFC). Given the distinctive and unique institutional features of the Indian market such as the dominant role of family business groups in the national economy, large market share of domestic audit firms, less litigious environment, and less effective professional accounting bodies in checking audit failure, our findings make a significant contribution to the literature on the role of audit quality as a corporate governance monitoring mechanism as reflected in the impact on earnings management and cost of equity capital.

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Section: Model Specificationsmentioning

confidence: 99%

Audit Quality, Earnings Management, and Cost of Equity Capital: Evidence from India

2017

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“…Past studies widely examined the relationship between IFRS adoption and economic growth ( Daske 2006 Houqe et al 2016). It is generally accepted that IFRS plays a vital role in more rational and accurate investment decision by investors, leads to improved reporting quality and significantly enhances the comparability of financial statements prepared by different countries and consequently create positive impacts on international trade.…”

Section: Literature Reviewmentioning

confidence: 99%

Causal Relationship between International Financial Reporting Standard (IFRS) and Foreign Direct Investment (FDI): A Panel Data Analysis of ASEAN Countries

Yousefinejad

Ahmad

Salleh

et al. 2018

AJAG

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This study investigates the causal relationship between International Financial Reporting Standard (IFRS) adoption and Foreign Direct Investment (FDI) inflows in ASEAN countries during the period of 2001 to 2016. This study applies panel co-integration and causality test to examine the short and long run and causal relationship between variables. IFRS adoption was measured based on dummy variable in Model 1 and level of IFRS compliance in Model 2. Findings of this study confirm the presence of co-integration between variables and the Dynamic Ordinary Least Square (DOLS) estimation analysis reveals positive and significant relationship between IFRS adoption, based on both measures and FDI inflows. Furthermore, the causality test shows that there is short run causality from IFRS to FDI inflows and long run causality between variables. This study extends knowledge on the relationship between IFRS adoption and FDI inflows by examining this relationship in the setting of ASEAN countries. Findings of this study could be useful for countries which are IFRS adopter and also non-adopters to understand the economic consequences of IFRS adoption, in their effort to attract more investors so as to accelerate economic growth.

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“…Houqe et al . (2016) focus on evidence from New Zealand and employ the modified PEG model (Easton, 2004) and also a publicly available PwC estimate of cost of equity as alternative measures for the cost of equity. Both measures show a reduction in the cost of equity after adoption of IFRS by New Zealand firms.…”

Section: Research Evidence and Hypothesesmentioning

confidence: 99%

Meta‐analysis of the Impact of Adoption of IFRS on Financial Reporting Comparability, Market Liquidity, and Cost of Capital

Opare

Houqe

Zijl

2021

Abacus

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A large number of empirical studies have addressed the effects of adoption of International Financial Reporting Standards (IFRS), but the results have been mixed. We use a meta‐analysis of 56 empirical studies with 1,265 effect sizes to determine the impact of adoption of IFRS on financial reporting comparability, market liquidity, cost of equity, and cost of debt. This approach provides an objective view of the empirical results, in contrast to narrative reviews which offer subjective conclusions. We find that IFRS adoption has increased financial reporting comparability and market liquidity, and reduced the cost of equity. For cost of debt, a decrease is observed only for voluntary adoption. Our meta‐regression analysis explains the variation in the observed effect of adoption of IFRS across mandatory and voluntary adoption of IFRS, and choice of measures, control variables, estimation methods, and the strength of the empirical results. We emphasize the importance of these study characteristics and call for further studies focusing on the cost of debt and also studies using recent data to reflect the changes in IFRS. This study should be of interest to regulators and policymakers as they are expected to assess the impacts of adoption of IFRS.

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The economic consequences of IFRS adoption: Evidence from New Zealand

Cited by 34 publications

References 37 publications

Audit Quality, Earnings Management, and Cost of Equity Capital: Evidence from India

Audit Quality, Earnings Management, and Cost of Equity Capital: Evidence from India

Causal Relationship between International Financial Reporting Standard (IFRS) and Foreign Direct Investment (FDI): A Panel Data Analysis of ASEAN Countries

Meta‐analysis of the Impact of Adoption of IFRS on Financial Reporting Comparability, Market Liquidity, and Cost of Capital

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