Investor reaction to IFRS for financial instruments in Europe: the role of firm-specific factors

Onali, Enrico; Ginesti, Gianluca; Ballestra, Luca Vincenzo

Abstract

We examine the market reaction to events related to the standard-setting process of International Financial Reporting Standard (IFRS) 9 for over 3,000 European firms that have adopted IFRS. We find that the market reaction to IFRS 9 is largely affected by firm-specific factors associated with information quality and information asymmetry. In particular, lower information asymmetry and higher information quality have a positive effect on market-adjusted returns. This is in conflict with the common view that IFRS 9 will improve accounting quality for those firms that need it most (namely, small firms with low liquidity and concentrated ownership structure).

Citation

Onali, E., Ginesti, G., & Ballestra, L. V. (2017). Investor reaction to IFRS for financial instruments in Europe: the role of firm-specific factors. Finance Research Letters, 21, https://doi.org/10.1016/j.frl.2017.01.002

• Journal Article Type: Article
• Acceptance Date: Jan 9, 2017
• Online Publication Date: Jan 10, 2017
• Publication Date: May 1, 2017
• Deposit Date: Jun 19, 2018
• Publicly Available Date: Jun 19, 2018
• Journal: Finance Research Letters
• Print ISSN: 1544-6123
• Electronic ISSN: 1544-6123
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 21
• DOI: https://doi.org/10.1016/j.frl.2017.01.002
• Keywords: Market reaction; Event study; IFRS 9; Information asymmetry; Information quality
• Public URL: https://nottingham-repository.worktribe.com/output/969588
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S1544612317300235
• Contract Date: Jun 19, 2018