Externalities of Mandatory IFRS Adoption: Evidence from Cross-Border Spillover Effects of Financial Information on Investment Efficiency

2012 ◽  
Author(s):  
Chen Chen ◽  
Danqing Xu Young ◽  
Zili Zhuang
Keyword(s):  
Spillover Effects ◽  
Financial Information ◽  
Investment Efficiency ◽  
Ifrs Adoption ◽  
Cross Border

Externalities of Mandatory IFRS Adoption: Evidence from Cross-Border Spillover Effects of Financial Information on Investment Efficiency

2012 ◽  
Vol 88 (3) ◽  
pp. 881-914 ◽  
Author(s):  
Chen Chen ◽  
Danqing Young ◽  
Zili Zhuang
Keyword(s):  
Spillover Effect ◽  
Spillover Effects ◽  
Data Availability ◽  
Investment Efficiency ◽  
Investment Performance ◽  
Ifrs Adoption ◽  
Cross Border ◽  
Legal Enforcement ◽  
Positive Externalities ◽  
Industry Competition

ABSTRACT This study examines the externalities of mandatory IFRS adoption on firms' investment efficiency in 17 European countries. We use the ROA difference between the firm and its peers to proxy for the information on the peers' investment performance. We find that the spillover effect of a firm's ROA difference versus its foreign peers, but not domestic peers, on the firm's investment efficiency increases after IFRS adoption. We also find that increased disclosure by both foreign and domestic peers after IFRS adoption has a spillover effect on a firm's investment efficiency. Further, a firm's investment changes induced by its ROA difference versus foreign peers are more value-relevant after IFRS adoption, and those induced by increased disclosure by foreign peers under IFRS are value-relevant. Additional analyses reveal that our results are affected by legal enforcement strength, peer composition, and industry competition. Overall, we document positive externalities of mandatory IFRS adoption. Data Availability: Data are available from commercial providers (Worldscope, DataStream, and I/B/E/S).

scholarly journals Domestic Lending and the Pandemic: How Does Banks' Exposure to Covid-19 Abroad Affect Their Lending in the United States?

2021 ◽  
Vol 2021 (056) ◽  
pp. 1-45
Author(s):  
Judit Temesvary ◽  
◽  
Andrew Wei ◽  
Keyword(s):  
United States ◽  
Spillover Effects ◽  
The United States ◽  
Registry Data ◽  
Cross Border ◽  
Foreign Countries ◽  
The U.S

We study how U.S. banks' exposure to the economic fallout due to governments' response to Covid-19 in foreign countries has affected their credit provision to borrowers in the United States. We combine a rarely accessed dataset on U.S. banks' cross-border exposure to borrowers in foreign countries with the most detailed regulatory ("credit registry") data that is available on their U.S.-based lending. We compare the change in the U.S. lending of banks that are more vs. less exposed to the pandemic abroad, during and after the onset of Covid-19 in 2020. We document strong spillover effects: U.S. banks with higher foreign exposures in badly "Covid-19-hit" regions cut their lending in the United States substantially more. This effect is particularly strong for longer-maturity loans and term loans and is robust to controlling for firms’ pandemic exposure.

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