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Does IFRSs adoption contribute to the protection of minority investors?

Bogdan Dima (), Stefana Maria Dima () and Miruna-Lucia Nachescu ()
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Bogdan Dima: West University of Timisoara
Stefana Maria Dima: West University of Timisoara
Miruna-Lucia Nachescu: West University of Timisoara

The Audit Financiar journal, 2018, vol. 16, issue 152, 584

Abstract: The purpose of the present article is to analyse the connection between the protection of minority shareholders and International Financial Reporting Standards’ (IFRSs’) adoption. Thus, the authors estimate the status of IFRSs’ adoption for 109 countries and involve the Protecting Minority Investors’ ranking (as a component of Ease of Doing Business Index provided by World Bank). In order to deal with the reverse causality issues, a GMM methodological framework was adopted. The results reveal that the impact of IFRSs’ adoption on a country’s rank (in respect to the status of minority investors’ protection) is reverse U-shaped and statistically significant. These findings are robust, even if we consider different control variables (legal system features, conditions of borrowed financial resources’ markets and insolvency resolution procedures) and estimation methodologies. In addition, the authors compare OECD versus non-OECD countries and find that the strongest impact of IFRSs’ adoption is in the case of the latter group.

Keywords: minority shareholders; IFRSs; legal system; insolvency; OECD & non-OECD countries (search for similar items in EconPapers)
JEL-codes: C10 C13 C14 D01 D22 G39 M49 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:aud:audfin:v:16:y:2018:i:152:p:584