The working paper, The Impact of Mandatory IFRS Adoption on Foreign Mutual Fund Ownership: The Role of Comparability, examines the change in foreign mutual fund investment in firms that began using IFRS after its mandatory adoption in the European Union (EU) in 2005, which the authors term a potential "real effect" of accounting.

The findings in the paper suggest that the effects of improved comparability associated with mandatory IFRS adoption on cross-border investment depend both on the institutional environment that shapes firms' reporting incentives (strong implementation credibility through the regulatory environment and management incentives) and on the extent of increased number of industry peers using the same accounting standards (uniformity).

With the current global debates on the implementation of IFRS in a number of the world's major jurisdictions (e.g. the United States and India), the paper is a timely reminder of how the objectives of IFRS might be best achieved.

Click to download the paper (PDF 372k). We have posted the paper with the kind permission of the authors, Mark DeFond (University of Southern California), Xuesong Hu (University of Oregon), Mingyi Hung (University of Southern California) and Siqi Li (Santa Clara University).