Does Mandatory Adoption of International Financial Reporting Standards in the European Union Reduce the Cost of Equity Capital?
TON DUC THANG University
Does Mandatory Adoption of International Financial Reporting Standards in the European Union Reduce the Cost of Equity Capital?
Tác giả:
Li, Siqi
Chủ đề:
Accounting standards
;
Accounting theory
;
Analytical forecasting
;
Capital
;
Capital costs
;
Cost estimates
;
Cost of capital
;
Cost of equity
;
Cost reduction
;
Equity
;
Equity capital
;
European Union
;
Financial
reporting
;
Impact analysis
;
International accounting standards
;
International
Financial
Reporting
Standards
;
Prior convictions
;
Reporting
standards
;
Studies
Là 1 phần của:
The Accounting review, 2010-03, Vol.85 (2), p.607-636
Mô tả:
This study examines whether the mandatory adoption of International Financial Reporting Standards (IFRS) in the European Union (EU) in 2005 reduces the cost of equity capital. Using a sample of 6,456 firm-year observations of 1,084 EU firms during the 1995 to 2006 period, I find evidence that, on average, the IFRS mandate significantly reduces the cost of equity for mandatory adopters by 47 basis points. I also find that this reduction is present only in countries with strong legal enforcement, and that increased disclosure and enhanced information comparability are two mechanisms behind the cost of equity reduction. Taken together, these findings suggest that while mandatory IFRS adoption significantly lowers firms' cost of equity, the effects depend on the strength of the countries' legal enforcement.
Nơi xuất bản:
Sarasota: American Accounting Association
Ngôn ngữ:
English
Số nhận dạng:
ISSN: 0001-4826
EISSN: 1558-7967
DOI: 10.2308/accr.2010.85.2.607
CODEN: ACRVAS
Nguồn:
AUTh Library subscriptions: ProQuest Central