Study finds 'net benefits' for IFRS adoption in Europe

  • News default Image

30 Oct 2008

A paper titled Market Reaction to the Adoption of IFRS in Europe examines the European stock market reaction to sixteen events associated with the adoption of IFRS in Europe.

The researchers – Chris Armstrong, Mary E. Barth, Alan D. Jagolinzer, and Edward J. Riedl – found that 'investors in European firms perceived net benefits associated with IFRS adoption'. The abstract states:
European IFRS adoption represented a major milestone towards financial reporting convergence yet spurred controversy reaching the highest levels of government. We find a more positive reaction for firms with lower quality pre-adoption information, which is more pronounced in banks, and with higher pre-adoption information asymmetry, consistent with investors expecting net information quality benefits from IFRS adoption. We also find that the reaction is less positive for firms domiciled in code law countries, consistent with investors' concerns over enforcement of IFRS in those countries. Finally, we find a positive reaction to IFRS adoption events for firms with high quality pre-adoption information, consistent with investors expecting net convergence benefits from IFRS adoption. Overall, the findings suggest that investors in European firms perceived net benefits associated with IFRS adoption.
You can Download the Working Paper Here.


Related Topics

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.