Moderating effect of IFRS adoption on FDI and conditional accounting conservatism in South Asia

Isuru Manawadu, Anna Che Azmi and Aslam Mohamed

Journal of Accounting in Emerging Economies, 2019, vol. 9, issue 1, 51-74

Abstract: Purpose - The purpose of this paper is to examine the moderating effect of IFRS adoption on the relationship between foreign direct investment (FDI) and conditional accounting conservatism in South Asia. Design/methodology/approach - This study uses the model developed by Basu (1997) and Ball and Shivakumar (2005) to examine the moderating effect of IFRS adoption on the relationship between FDI and conditional accounting conservatism. Data are tested by running panel generalized method of moments–2SLS estimation for the period of 2006–2015. Findings - A moderating effect of IFRS adoption was found on the relationship between FDI and conditional accounting conservatism in South Asia. Research limitations/implications - This study contributes to the literature by adding new evidence on the moderating effect of IFRS adoption on the relationship between FDI and conditional accounting conservatism. Originality/value - The relationship between FDI and conditional accounting conservatism was moderated by IFRS adoption in South Asia. This finding provides new evidence to the literature as well as for the policy makers to consider on IFRS adoption.

Keywords: IFRS; Financial reporting quality; Conditional conservatism; Foreign investments; India; Pakistan; Bangladesh and Sri Lanka (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jaeepp:jaee-03-2017-0035

DOI: 10.1108/JAEE-03-2017-0035

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