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

Enrico Onali, Gianluca Ginesti, Luca Vincenzo Ballestra*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

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).
Original languageEnglish
JournalFinance Research Letters
VolumeIn press
Early online date10 Jan 2017
DOIs
Publication statusE-pub ahead of print - 10 Jan 2017

Keywords

  • market reaction
  • event study
  • IFRS 9
  • information asymmetry
  • information quality

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