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

Enrico Onali, Gianluca Ginesti and Luca Vincenzo Ballestra

Finance Research Letters, 2017, vol. 21, issue C, 72-77

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: Market reaction; Event study; IFRS 9; Information asymmetry; Information quality (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:21:y:2017:i:c:p:72-77

DOI: 10.1016/j.frl.2017.01.002

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