Contemporary Accounting Research Vol. 36 No. 4 2019

Accounting Standards Harmonization and Financial Integration

Dan Dhaliwal¹; Wen He²; Yan Li³; Raynolde Pereira⁴

¹ University of Arizona (deceased) · ² University of Queensland · ³ University of Melbourne · ⁴ University of Missouri

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.

DOI

10.1111/1911-3846.12495

Volume

36

Issue

4

Pages

2437-2466

Language

en

Sources

bibtex:phds-export.bib crossref openalex

Cite

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