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

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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)

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.

Suggested Citation

  • Zhi-Yuan Feng & Ying-Chieh Wang & Hua-Wei Huang, 2017. "Does IFRS adoption decrease the cost of equity of the global tourism firms?," Tourism Economics, , vol. 23(8), pages 1615-1631, December.
    • Handle: RePEc:sae:toueco:v:23:y:2017:i:8:p:1615-1631
    DOI: 10.1177/1354816617715158
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