TY - JOUR
T1 - Product market effects of IFRS adoption
AU - Downes, Jimmy F.
AU - Flagmeier, Vanessa
AU - Godsell, David
N1 - Publisher Copyright:
© 2018 Elsevier Inc.
PY - 2018/9/1
Y1 - 2018/9/1
N2 - 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.
AB - 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.
KW - Financial reporting regulation
KW - Product market competition
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U2 - 10.1016/j.jaccpubpol.2018.09.004
DO - 10.1016/j.jaccpubpol.2018.09.004
M3 - Article
AN - SCOPUS:85053335344
SN - 0278-4254
VL - 37
SP - 376
EP - 401
JO - Journal of Accounting and Public Policy
JF - Journal of Accounting and Public Policy
IS - 5
ER -