Accounting Standards Harmonization and Financial Integration

Dan S Dhaliwal, Wen He, Yan Li, Raynolde Pereira

Research output: Contribution to journalArticle

Abstract

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 languageEnglish (US)
JournalContemporary Accounting Research
DOIs
StatePublished - Jan 1 2019

Fingerprint

Accounting standards
Harmonization
Financial integration
IFRS adoption
Financial market integration
International Financial Reporting Standards
Foreign ownership
Stock returns
Financial markets
Difference-in-differences
Market integration
Friction

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

Accounting Standards Harmonization and Financial Integration. / Dhaliwal, Dan S; He, Wen; Li, Yan; Pereira, Raynolde.

In: Contemporary Accounting Research, 01.01.2019.

Research output: Contribution to journalArticle

@article{8586a1ac8132478d82f43b7c06c9df94,
title = "Accounting Standards Harmonization and Financial Integration",
abstract = "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.",
author = "Dhaliwal, {Dan S} and Wen He and Yan Li and Raynolde Pereira",
year = "2019",
month = "1",
day = "1",
doi = "10.1111/1911-3846.12495",
language = "English (US)",
journal = "Contemporary Accounting Research",
issn = "0823-9150",
publisher = "Wiley-Blackwell",

}

TY - JOUR

T1 - Accounting Standards Harmonization and Financial Integration

AU - Dhaliwal, Dan S

AU - He, Wen

AU - Li, Yan

AU - Pereira, Raynolde

PY - 2019/1/1

Y1 - 2019/1/1

N2 - 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.

AB - 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.

UR - http://www.scopus.com/inward/record.url?scp=85068875456&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85068875456&partnerID=8YFLogxK

U2 - 10.1111/1911-3846.12495

DO - 10.1111/1911-3846.12495

M3 - Article

JO - Contemporary Accounting Research

JF - Contemporary Accounting Research

SN - 0823-9150

ER -