Download This PaperEmpirical Evidence on Jurisdictions that Adopt IFRS
33 Pages Posted: 19 Jul 2005
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Empirical Evidence on Jurisdictions that Adopt IFRS
Empirical Evidence on Jurisdictions that Adopt IFRS
Date Written: May 24, 2006
Abstract
International Financial Reporting Standards (IFRS) have recently been adopted in a number of jurisdictions, including the European Union. Despite the importance of IFRS in the context of global accounting standards harmonization, little is known regarding what institutional factors influence countries' decisions to voluntarily adopt IFRS. This issue is relevant to standard setters because a better understanding of the motivations for adoption will enable them to promote IFRS more effectively to countries that currently do not employ IFRS. Consistent with bonding theory, we find that countries with weaker investor protection mechanisms are more likely to adopt IFRS. Our evidence also shows that jurisdictions that are perceived to provide better access to their domestic capital markets are more likely to adopt IFRS. Taken together, our results are consistent with the view that IFRS represent a vehicle through which countries can improve investor protection and make their capital markets more accessible to foreign investors.
Keywords: International Financial Reporting Standards, Bonding, Capital Market Access
JEL Classification: G15, M41, M44, M47, G38
Suggested Citation: Suggested Citation
Ole-Kristian Hope
University of Toronto - Rotman School of Management ( email )
105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Hope.aspx
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