 Mandatory adoption of IFRS and cost of capital: does country classification matter? Evidence from developed versus developing countriesSolomon George Zori African Journal of Accounting, Auditing and Finance, 2021, vol. 7, issue 3, 269-300 Abstract: We examine the economic consequences of mandatory adoption of International Financial Reporting Standards (IFRS) from firm level perspective, and across country classification (developing versus developed economy). Using a global sample of firms from 40 (45) countries from 1993-2016, and applying difference-in-differences design, we analyse the induced changes in the cost of equity (debt) capital following IFRS adoption. We find that mandatory adopters in developing countries are not more likely to experience significant decreases in the cost of equity in the post-adoption period than firms in developed countries. However, for cost of debt we identify an advantage of mandatory adopters over non-adopters in developing as well as in developed countries. At the same time, firms in developed countries show a larger decrease in the cost of debt than firms in developing countries. Overall, our findings suggest that mandatory IFRS adoption does not necessarily connote economic benefit outcomes and should be considered when promoting the worldwide introduction of IFRS, especially in developing countries. Keywords: IFRS adoption; cost of equity; cost of debt; developing; developed; country. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ids:ajaafi:v:7:y:2021:i:3:p:269-300 Access Statistics for this article More articles in African Journal of Accounting, Auditing and Finance from Inderscience Enterprises Ltd |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.