Economic Consequences of IFRS Adoption: The Role of Changes in Disclosure Quality

• 成果类型: Article
• 署名作者: Li, Bin; Siciliano, Gianfranco; Venkatachalam, Mohan
• 署名单位: University of Houston System; University of Houston; China Europe International Business School; Duke University
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12638
• 发表日期: 2021
• 页码: 129-179
• 关键词: international accounting standards; financial-reporting standards; VALUE-RELEVANCE; mandatory adoption; INFORMATION; IMPACT; disaggregation; comparability; improve; MARKET

摘要

This study adopts a two-step approach to highlight the disclosure quality channel that drives economic consequences of IFRS adoption. This approach helps address the identification challenge noted by prior research and offers direct evidence on the role of disclosure quality. In the first step, we document the impact of the IFRS mandate on changes in disclosure quality proxied by the granularity of line item disclosure in financial statements. We find that IFRS-adopting firms provide more disaggregated information upon IFRS adoption, such as more granular disclosure of intangible assets and long-term investments on the balance sheet and greater disaggregation of depreciation, amortization, and nonoperating income items on the income statement. In the second step, we link the observed disclosure changes to the benefits and costs of IFRS adoption. We show that greater disaggregated information due to IFRS adoption enhances market liquidity and decreases information asymmetry, but does not affect audit fees differentially. Our evidence has implications for standard setters as they evaluate cost-benefit trade-offs when considering disclosure changes in the future.