Re-examining the impact of mandatory IFRS adoption on IPO underpricing

• 成果类型: Article
• 署名作者: Byard, Donal; Darrough, Masako; Suh, Jangwon
• 署名单位: City University of New York (CUNY) System; Baruch College (CUNY); New York Institute Technology
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-020-09576-3
• 发表日期: 2021
• 页码: 1344-1389

摘要

In the mid-2000s, the European Union adopted a number of regulatory reforms intended to increase transparency and disclosure for IPO firms, including mandating the use of International Financial Reporting Standards (IFRS). The reforms also included (1) adoption of the Prospectus Directive, which mandated increased IPO prospectus disclosures and (2) increased accounting enforcement. These new regulations apply only to IPOs listing on EU-regulated markets; firms admitted to trading on exchange-regulated markets are exempt. We examine the impact of these regulations on IPO firms. For firms listing on EU-regulated markets, we find no association between IFRS and IPO underpricing; however, we find a significant decrease in IPO underpricing associated with adoption of the Prospectus Directive in countries that also increased accounting enforcement. Further, we confirm that, after 2005, most IPOs on exchange-regulated markets went public using domestic accounting standards, not IFRS. Our findings suggest that mandatory IFRS adoption did not play a major role in reducing IPO underpricing and contrast sharply with prior results, which failed to account for IPOs on exchange-regulated markets. Our evidence highlights the importance of controlling for contemporaneous changes in regulations and details of the institutional setting before attributing major economic consequences to a switch from domestic accounting standards to IFRS.