Disentangling Mandatory IFRS Reporting and Changes in Enforcement
Journal of Accounting and Economics, Vol. 56, Pages 178-188, 2013
29 Pages Posted: 9 Nov 2013 Last revised: 3 Apr 2016
Date Written: November 27, 2013
Abstract
We discuss “Mandatory IFRS Reporting and Changes in Enforcement” by Christensen, Hail, and Leuz (CHL, 2013). We begin by discussing CHL in the context of prior literature, and subsequently discuss the research design, results, and inferences. CHL seeks to contribute to the literature by disentangling the liquidity benefits of changes in accounting standards from those of changes in enforcement. Taken at face value, we believe that the evidence in CHL suggests that both change in enforcement and adoption of International Financial Reporting Standards (IFRS) confer liquidity benefits. The largest benefits obtain when the change to IFRS reporting is combined with change in enforcement. This is not to say that enforcement conveys capital market benefits but IFRS reporting does not, or that IFRS reporting conveys capital market benefits but enforcement does not; both are necessary to confer capital market benefits.
Keywords: International accounting, International Financial Reporting Standards (IFRS), Regulation, Enforcement, Liquidity, Identification, Methodology
JEL Classification: C13, C51, G15, K22, M41
Suggested Citation: Suggested Citation
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