The diffusion of innovation theory and the effects of IFRS adoption by multinational corporations on capital market performance: a cross-country analysis

Elmghaamez, Ibrahim Khalifa; Attah-Boakye, Rexford; Adams, Kweku; Agyemang, Jacob

Abstract

This article seeks to contribute to International Financial Reporting Standards (IFRS) literature by examining the effects of adopting IFRS on stock market performance worldwide from the diffusion of innovation theory perspective. Our study revealed several interesting findings after using combinations of unique panel data sets from 110 countries worldwide and conducting a robust empirical analysis from 1995 to 2014. First, we found a positive association between late mandatory IFRS adoption and stock market integration in Europe. Second, our findings indicate a significant negative association between early IFRS adoption and the following financial indicators: stock market trading volumes, stock market capitalization, market turnover, and market return. Third, our study reveals an insignificant association between early IFRS adoption and stock price volatility alongside stock market development. Our findings are robust and have significant practical and policy implications for regulators and policymakers of multinational corporations.

Citation

Elmghaamez, I. K., Attah-Boakye, R., Adams, K., & Agyemang, J. (2022). The diffusion of innovation theory and the effects of IFRS adoption by multinational corporations on capital market performance: a cross-country analysis. Thunderbird International Business Review, 64(1), 81-108. https://doi.org/10.1002/tie.22244

• Journal Article Type: Article
• Acceptance Date: Aug 5, 2021
• Online Publication Date: Oct 30, 2021
• Publication Date: Jan 1, 2022
• Deposit Date: Oct 7, 2021
• Publicly Available Date: Oct 31, 2023
• Journal: Thunderbird International Business Review
• Print ISSN: 1096-4762
• Electronic ISSN: 1520-6874
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 64
• Issue: 1
• Pages: 81-108
• DOI: https://doi.org/10.1002/tie.22244
• Keywords: International Financial Reporting Standards; Diffusion of Innovation Theory; Stock Market Indicators; Financial Market Consequences
• Public URL: https://nottingham-repository.worktribe.com/output/6394741
• Publisher URL: https://onlinelibrary.wiley.com/doi/abs/10.1002/tie.22244
• Additional Information: This is the peer reviewed version of the following article: Elmghaamez, I. K., Attah-Boakye, R., Adams, K., & Agyemang, J. (2021). The diffusion of innovation theory and the effects of IFRS adoption by multinational corporations on capital market performance: a cross-countryanalysis. Thunderbird International Business Review, 64( 1), 81– 108, which has been published in final form at https://doi.org/10.1002/tie.22244. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.