Abstract
| Original language | English |
|---|---|
| Place of Publication | Tilburg |
| Publisher | Accounting |
| Number of pages | 57 |
| Volume | 2010-82 |
| Publication status | Published - 2010 |
Publication series
| Name | CentER Discussion Paper |
|---|---|
| Volume | 2010-82 |
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Keywords
- IFRS
- mandatory adoption
- stock return synchronicity
- information environment
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Mandatory IFRS Reporting and Stock Price Informativeness. / Beuselinck, C.A.C.; Joos, P.P.M.; Khurana, I.K.; van der Meulen, S.
Tilburg : Accounting, 2010. (CentER Discussion Paper; Vol. 2010-82).Research output: Working paper › Discussion paper › Other research output
TY - UNPB
T1 - Mandatory IFRS Reporting and Stock Price Informativeness
AU - Beuselinck, C.A.C.
AU - Joos, P.P.M.
AU - Khurana, I.K.
AU - van der Meulen, S.
N1 - Pagination: 57
PY - 2010
Y1 - 2010
N2 - In this paper, we examine whether mandatory adoption of IFRS influences the flow of firm-specific information and contributes to stock price informativeness as measured by stock return synchronicity. Using a constant sample of 1,904 mandatory IFRS adopters in 14 EU countries for the period 2003-2007, we find a V-shaped pattern in synchronicity around IFRS adoption, which is consistent with IFRS disclosures revealing new firm-specific information in the adoption period (i.e., a reduction of synchronicity) and subsequently lowering the surprise of future disclosures (i.e., an increase in synchronicity). We also find mandatory IFRS adoption increases analysts’ ability to incorporate industry-level information into stock price. However, we are unable to detect a reduction in the private information advantage enjoyed by institutional owners post-IFRS adoption. Moreover, we find the synchronicity effects to be more pronounced for firms in countries with larger differences in local GAAP relative to IFRS. Overall, our evidence yields novel insights on the consequences of mandatory IFRS adoption by investigating its effect on stock price informativeness and the distinctive roles played by a firm’s information environment.
AB - In this paper, we examine whether mandatory adoption of IFRS influences the flow of firm-specific information and contributes to stock price informativeness as measured by stock return synchronicity. Using a constant sample of 1,904 mandatory IFRS adopters in 14 EU countries for the period 2003-2007, we find a V-shaped pattern in synchronicity around IFRS adoption, which is consistent with IFRS disclosures revealing new firm-specific information in the adoption period (i.e., a reduction of synchronicity) and subsequently lowering the surprise of future disclosures (i.e., an increase in synchronicity). We also find mandatory IFRS adoption increases analysts’ ability to incorporate industry-level information into stock price. However, we are unable to detect a reduction in the private information advantage enjoyed by institutional owners post-IFRS adoption. Moreover, we find the synchronicity effects to be more pronounced for firms in countries with larger differences in local GAAP relative to IFRS. Overall, our evidence yields novel insights on the consequences of mandatory IFRS adoption by investigating its effect on stock price informativeness and the distinctive roles played by a firm’s information environment.
KW - IFRS
KW - mandatory adoption
KW - stock return synchronicity
KW - information environment
M3 - Discussion paper
VL - 2010-82
T3 - CentER Discussion Paper
BT - Mandatory IFRS Reporting and Stock Price Informativeness
PB - Accounting
CY - Tilburg
ER -