Does IFRS adoption decrease the cost of equity of the global tourism firms?

Zhi-Yuan Feng, Ying-Chieh Wang and Hua-Wei Huang
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Zhi-Yuan Feng: Beijing Institute of Technology, Zhuhai, China
Ying-Chieh Wang: Ming Chuan University, Taiwan
Hua-Wei Huang: National Cheng Kung University, Taiwan

Tourism Economics, 2017, vol. 23, issue 8, 1615-1631

Abstract: This article answers the question of whether the adoption of International Financial Reporting Standards (IFRS) reduces the cost of equity capital, with a focus on the tourism industry. We employ a set of global tourism companies and find that mandatory IFRS adoption has a significantly negative relation with the cost of equity capital. However, we find that this relation is varied with different business cultures and geographic areas. Moreover, from interactive analyses of country institutions for the relation between mandatory IFRS adoption and tourism firm’s cost of equity, we show that adopting IFRS complements the deficiencies of various country institutions, such as investor protection, the strength of legal enforcement, and corporate governance.

Keywords: International Financial Reporting Standards (IFRS); the cost of equity; tourism industry (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:23:y:2017:i:8:p:1615-1631

DOI: 10.1177/1354816617715158

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