Mandatory IFRS adoption and the U.S. home bias

Inder K. Khurana, Paul N. Michas

Research output: Contribution to journalArticlepeer-review

51 Scopus citations


This paper examines whether mandatory IFRS adoption at the country level lowers U.S. investors' propensity to overweight domestic stocks in their common stock portfolios (generally referred to as home bias). We find that, on average, U.S. home bias decreases for countries that mandate IFRS adoption, after controlling for country-fixed effects. We also find that the reduction in the U.S. home bias after the mandatory adoption of IFRS is greater for countries with larger differences between IFRS and their domestic accounting standards, for countries with a stricter rule of law and a common law legal origin, and in countries with greater incentives to report high-quality financial information. Overall, our results indicate that a common set of global accounting standards matters for portfolio holdings of U.S. investors and that U.S. investors regard the enforcement of standards to be a key factor in making investments outside the U.S.

Original languageEnglish (US)
Pages (from-to)729-753
Number of pages25
JournalAccounting Horizons
Issue number4
StatePublished - Dec 2011


  • Home bias
  • International accounting
  • International financial reporting standards
  • U.S. investments

ASJC Scopus subject areas

  • Accounting


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