Economic Effects of IFRS Adoption in Brazil: An Empirical Analysis of Stock Price Synchronicity

2014 ◽  
Author(s):  
Verrnica de FFtima Santana ◽  
Raquel Wille Sarquis ◽  
Isabel Lourenno ◽  
Bruno Meirelles Salotti ◽  
Fernando Dal-Ri Murcia
Keyword(s):  
Empirical Analysis ◽  
Stock Price ◽  
Economic Effects ◽  
Stock Price Synchronicity ◽  
Ifrs Adoption

scholarly journals Informational Consequences of Mandatory IFRS Adoption in China

2018 ◽  
Vol 8 (3) ◽  
pp. 295
Author(s):  
Archana Patro
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Demand Elasticity ◽  
Future Price ◽  
Multivariate Techniques ◽  
Specific Information ◽  
Stock Price Synchronicity ◽  
Ifrs Adoption ◽  
Mandatory Adoption ◽  
The Impact

In China, International Financial Reporting Standards (IFRS) have become mandatory for listed firms in 2007. While earlier research on “voluntary” adopters has provided valuable insights on the impact of IFRS disclosure, these results cannot be generalised in a mandatory setting. We expect effects from mandatory IFRS adoption to be different from those documented for voluntary IFRS adopters since the former group is essentially forced to adopt IFRS. The empirical model, relating to stock price synchronicity with adoption of IFRS, and other firm-specific control variables were analysed using both univariate and multivariate techniques. Different types of panel data estimates were used and compared so as to interpret the results with the best-suited parameters for different data sets for different markets. Studying data covering the period from 2001-2013, the present study examines whether mandatory adoption of IFRS reduces Stock Price Synchronicity for Chinese firms. The empirical results show that IFRS adoption improves information environment by the capitalization of firm-specific information into stock prices, thereby reduces the Stock Price synchronicity. The paper further examines if the information impact was homogeneous across industries. This pattern of decrease in stock price synchronicity after adoption of IFRS is different for different industries taken for analysis. Aerospace & Defense, Automobiles Beverages, Metals & Mining, Retailer& Real Estate Operations have reduced synchronicity but other industries such as Biotech, Electric utilities, Electronic, Leisure products, Renewable energy and Telecom have increased synchronicity. For these industries, the low reliance on market wide information makes reasonable economic sense because they have relatively low demand elasticity. Hence, in demand inelastic industries, future price sensitive factors remain constant and so a changed IFRS accounting regime has little marginal impact. This study provides a different methodological approach by concentrating on Industry wide information effects from the mandatory adoption. These findings have important implications that apply not only to China, but also to other emerging and transitional economies such as India where IFRS is yet to be mandated. Moreover it will help regulators, academicians and practitioners to assess the informational benefit of adopting IFRS.

scholarly journals The effects of industry characteristics on stock price synchronicity around IFRS adoption

2019 ◽  
Vol 16 (1) ◽  
pp. 89-99
Author(s):  
Hyejeong Shin
Keyword(s):  
Capital Market ◽  
Stock Price ◽  
Earnings Quality ◽  
Industry Concentration ◽  
Specific Information ◽  
Stock Price Synchronicity ◽  
Ifrs Adoption ◽  
Incremental Effect ◽  
Adoption Effect ◽  
Korean Market

The purpose of this paper is to investigate whether a change in stock price synchronicity after IFRS adoption differs by industry characteristics. IFRS adoption was expected to improve earnings quality and comparability. Industry concentration and homogeneity are utilized as industry characteristics, which are known as determinants to earnings quality and comparability to examine IFRS adoption effect on the synchronicity. Using Korean firms listed from 2006 to 2015, the author found that stock price synchronicity decreases after IFRS adoption. The reduction in synchronicity is larger for firms in a concentrated industry. However, the researcher didn’t find that incremental effect of homogeneity on synchronicity changes around IFRS adoption. These results remain unchanged after several robustness tests. The results imply that earnings quality after IFRS adoption improves, while comparability effect is not evident in the Korean market. The paper has implications that co-movement of stock price decreases after IFRS adoption in that delivering firm-specific information to investors; in addition, the magnitude of impacts of IFRS adoption differs by the industry characteristics. The author extends prior studies about IFRS adoption effect on the capital market by providing that the effects need to be examined after considering the industry characteristics.

Stock Price Synchronicity and Skewness

2013 ◽  
Author(s):  
Omar Farooq ◽  
Mohammed Bouaddi ◽  
Mohamed Douch
Keyword(s):  
Stock Price ◽  
Stock Price Synchronicity

Analysts' Information Acquisition and Stock Price Synchronicity: A Regulatory Perspective from China

2018 ◽  
Vol 33 (1) ◽  
pp. 153-179 ◽  
Author(s):  
Haiyan Jiang ◽  
Donghua Zhou ◽  
Joseph H. Zhang
Keyword(s):  
Insider Trading ◽  
Private Information ◽  
Stock Prices ◽  
Information Acquisition ◽  
Stock Price ◽  
Specific Information ◽  
Stock Price Synchronicity ◽  
Playing Field ◽  
Information Advantage ◽  
Private Information Acquisition

SYNOPSIS Against the backdrop of the Chinese Directive 40 (China's Reg FD) issued in 2007 as an attempt to curb insider trading and to level the information playing field, this study investigates whether analysts' private information acquisition influences the extent to which firm-specific information is impounded into stock prices, i.e., stock price synchronicity, and how the restrictions on selective disclosures imposed by Directive 40 have shaped the relationship between analyst information acquisition and synchronicity. Using a pre-Directive 40 sample, we show that synchronicity is negatively related to analysts' private information acquisition, which provides support for the “information advantage” argument of analysts' information production. However, the ability of analysts' private information acquisition in improving firm-specific information incorporated into stock price is mitigated post-Directive 40 due to a restriction on selective disclosures and/or private communication. Moreover, we find that this regulatory impact varies for firms being followed by affiliated analysts versus non-affiliated analysts. JEL Classifications: G14; G15; G17; G18.

Does Mandatory IFRS Adoption Affect Audit Hours and the Effectiveness to Constrain Earnings Management? Evidence from Italy

2021 ◽  
Author(s):  
Stefano Azzali ◽  
Tatiana Mazza ◽  
Kenneth J. Reichelt ◽  
Dechun Wang
Keyword(s):  
Earnings Management ◽  
Empirical Analysis ◽  
Audit Quality ◽  
Ifrs Adoption ◽  
Hourly Rate ◽  
Prior Literature ◽  
Abnormal Accruals

We examine the effect IFRS adoption has had on audit effort and the effectiveness of greater audit effort on constraining earnings management. While prior studies have examined the costs of IFRS adoption, it is unclear whether IFRS adoption affects audit effort and whether extra audit effort results in higher audit quality. We find that following Italy's adoption of IFRS, audit hours (but not the hourly rate) increased, suggesting that audit effort (in audit hours) increased following IFRS adoption. We then examine whether more audit hours are associated with improved audit quality in the IFRS regime. Consistent with prior literature (Caramanis and Lennox 2008), we find that more audit effort is associated with lower abnormal accruals in the period before IFRS adoption. Interestingly, after Italy adopted IFRS, abnormal accruals are lower, but audit hours were less associated with lower abnormal accruals, implying that more audit hours are needed to constrain earnings management. Collectively, our empirical analysis suggests that while audit effort increased with mandatory IFRS adoption, the effectiveness of audit effort to constrain earnings management decreased.

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