Economic Integration, IFRS Adoption and Accounting Comparability


Rodrigo Verdi
Rodrigo Verdi
  • Speaker
Sloan School of Management, Massachusetts Institute of Technology

Event Information

Type
Research Seminar
Programme
Accounting
Date
Tue. 14 May. 2013
Contact
Felix Lamp
Time
11:30-13:00 hours
Location
T03-42


Abstract

We examine the effect of economic integration on accounting comparability. Using the adoption of the common Euro currency as a shock to economic integration, we document two effects. First, we show a direct effect around the adoption of the Euro – accounting comparability increases among industries in adopting countries relative to those in non-adopting ones; and this increase is more pronounced when adopting countries also experience increases in arm’s-length financing. Second, economic integration also has an indirect effect, by influencing the effect of accounting standards harmonization (proxied by IFRS adoption) on accounting comparability. We find that the effect of IFRS adoption on accounting comparability is two times larger for Euro members compared to non-Euro members. Our paper highlights the interplay between economic integration, accounting standards harmonization, and accounting comparability.

This seminar is organised by the Erasmus Accounting Research Group

Stephan Kramer
  • Coordinator
Felix Lamp
  • Coordinator