CN EN
Advanced

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

Indexed by

SSCI ABDC-A*

Abstract

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 Leuz and Wysocki (2006) and offer 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 non‐operating 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 tradeoffs when considering disclosure changes in the future.

Keyword

Author Community

[Li, B.] University of Houston

[Siciliano, G.] China Europe International Business School

[Venkatachalam, M.] Duke University


Related Article

Source

Contemporary Accounting Research

ISSN:0823-9150

Year:2020

Issue:Early Access

Page:1

ESI Discipline:ECONOMICS & BUSINESS;

Cited Count
W
Loading...
C
Loading...
Get Fulltext
Rights and Licenses
Related Keywords
Communities & Collections
Access Stats
Creative Commons Licence
The content of CEIBS Research Online is licensed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND 4.0).