Accounting Standards Harmonization and Financial Integration

Posted: 21 May 2019 Last revised: 6 Jun 2019

See all articles by Dan S. Dhaliwal

Dan S. Dhaliwal

University of Arizona - Department of Accounting (deceased)

Wen He

Monash University

Yan LI

University of Melbourne - Faculty of Business and Economics

Raynolde Pereira

University of Missouri at Columbia - School of Accountancy

Date Written: October 31, 2018

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 International Financial Reporting Standards (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.

Suggested Citation

Dhaliwal, Dan S. and He, Wen and LI, Yan and Pereira, Raynolde, Accounting Standards Harmonization and Financial Integration (October 31, 2018). Contemporary Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3376727

Dan S. Dhaliwal

University of Arizona - Department of Accounting (deceased)

Wen He

Monash University ( email )

H3.43, Building H, Level 3
Monash University Caulfiled
Melbourne, VIC 3145
Australia

Yan LI (Contact Author)

University of Melbourne - Faculty of Business and Economics ( email )

Victoria, 3010
Australia
383449244 (Phone)
3010 (Fax)

Raynolde Pereira

University of Missouri at Columbia - School of Accountancy ( email )

337 Cornell Hall
Columbia, MO 65211
United States
573-882-6253 (Phone)

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