Product market effects of IFRS adoption

Jimmy F. Downes, Vanessa Flagmeier, David Godsell

Research output: Contribution to journalArticlepeer-review


Prior literature finds that International Financial Reporting Standards (IFRS) adopters enjoy lower financing costs subsequent to IFRS adoption. We predict and find that mandatory IFRS adopters exploit lower financing costs to increase market share vis-à-vis non-adopters. This effect is robust across several different model specifications in a sample capturing the universe of public and private firms in the EU, in a matched sample of public and private firms, and in a public firm sample comparing mandatory and voluntary IFRS adopters. We further find that IFRS is associated with an increase (decrease) in industry sales concentration (competition), consistent with large public firms increasing market share. In supplemental analyses, we find that mandatory adopters issue more equity and debt after IFRS adoption and that larger market share gains accrue to those mandatory IFRS adopters that issue more equity and debt after IFRS adoption. Overall, we provide evidence of unintended product market consequences of IFRS adoption.

Original languageEnglish (US)
Pages (from-to)376-401
Number of pages26
JournalJournal of Accounting and Public Policy
Issue number5
StatePublished - Sep 1 2018
Externally publishedYes


  • Financial reporting regulation
  • Product market competition

ASJC Scopus subject areas

  • Accounting
  • Sociology and Political Science


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