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

Enrico Onali; Gianluca Ginesti; Luca Vincenzo Ballestra

doi:10.1016/j.frl.2017.01.002

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 journal › Article (Academic Journal) › peer-review

22 Citations (Scopus)

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 language	English
Pages (from-to)	72-77
Number of pages	6
Journal	Finance Research Letters
Volume	21
DOIs	https://doi.org/10.1016/j.frl.2017.01.002
Publication status	Published - May 2017

Bibliographical note

Publisher Copyright:
© 2017 Elsevier Inc.

Research Groups and Themes

AF Financial Markets

Keywords

Event study
IFRS 9
Information asymmetry
Information quality
Market reaction

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title = "Investor reaction to IFRS for financial instruments in Europe: The role of firm-specific factors",

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).",

keywords = "Event study, IFRS 9, Information asymmetry, Information quality, Market reaction",

author = "Enrico Onali and Gianluca Ginesti and Ballestra, \{Luca Vincenzo\}",

note = "Publisher Copyright: {\textcopyright} 2017 Elsevier Inc.",

year = "2017",

month = may,

doi = "10.1016/j.frl.2017.01.002",

language = "English",

volume = "21",

pages = "72--77",

journal = "Finance Research Letters",

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TY - JOUR

T1 - Investor reaction to IFRS for financial instruments in Europe

T2 - The role of firm-specific factors

AU - Onali, Enrico

AU - Ginesti, Gianluca

AU - Ballestra, Luca Vincenzo

PY - 2017/5

Y1 - 2017/5

N2 - 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).

AB - 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).

KW - Event study

KW - IFRS 9

KW - Information asymmetry

KW - Information quality

KW - Market reaction

UR - https://www.scopus.com/pages/publications/85009792194

U2 - 10.1016/j.frl.2017.01.002

DO - 10.1016/j.frl.2017.01.002

M3 - Article (Academic Journal)

AN - SCOPUS:85009792194

SN - 1544-6123

VL - 21

SP - 72

EP - 77

JO - Finance Research Letters

JF - Finance Research Letters

ER -

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

Abstract

Bibliographical note

Research Groups and Themes

Keywords

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