The effect of voluntary international financial reporting standards adoption on information asymmetry in the stock market: Evidence from Japan
Research in International Business and Finance, ISSN: 0275-5319, Vol: 69, Page: 102250
2024
- 4Citations
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Example: if you select the 1-year option for an article published in 2019 and a metric category shows 90%, that means that the article or review is performing better than 90% of the other articles/reviews published in that journal in 2019. If you select the 3-year option for the same article published in 2019 and the metric category shows 90%, that means that the article or review is performing better than 90% of the other articles/reviews published in that journal in 2019, 2018 and 2017.
Citation Benchmarking is provided by Scopus and SciVal and is different from the metrics context provided by PlumX Metrics.
Article Description
This study investigates how voluntary International Financial Reporting Standards (IFRS) adoption impacts information asymmetry in the stock market. We analyze data from firms in Japan, where local accounting standards have substantially converged with IFRS but are more rules-based than principles-based IFRS. These different implementation approaches allow us to investigate how increased accounting flexibility influences recognition and measurement practices, attenuating the effects of accounting standard differences on the level of accounting rule existence or non-existence. We find that information asymmetry increases after voluntary IFRS adoption, which is driven by small- and medium-sized IFRS adopters’ decrease in earnings quality after voluntary IFRS adoption. Additional analyses reveal that firms’ reporting incentives and accounting resources influence these changes. These results suggest that IFRS’s increased accounting flexibility in recognition and measurement practices worsens the information environments of firms with weak incentives to commit to transparent financial reporting or fewer accounting resources (i.e., small- and medium-sized firms).
Bibliographic Details
http://www.sciencedirect.com/science/article/pii/S0275531924000424; http://dx.doi.org/10.1016/j.ribaf.2024.102250; http://www.scopus.com/inward/record.url?partnerID=HzOxMe3b&scp=85186519217&origin=inward; https://linkinghub.elsevier.com/retrieve/pii/S0275531924000424; https://dx.doi.org/10.1016/j.ribaf.2024.102250
Elsevier BV
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