We empirically examine whether adopting a uniform set of accounting standards mitigates information frictions in financial markets and facilitates market integration. Using a difference-in-difference design, we find that after the mandatory adoption of IFRS local stock returns incorporate more global information and at a faster speed. The effect of IFRS adoption is stronger in countries where there are larger improvements in accounting comparability and for firms with a larger increase in foreign ownership. Overall, our results suggest that accounting standards harmonization facilitates financial market integration.
|Original language||English (US)|
|Number of pages||30|
|Journal||Contemporary Accounting Research|
|State||Published - Dec 1 2019|
ASJC Scopus subject areas
- Economics and Econometrics