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Global convergence of financial reporting and resilience to fiscal spillover shocks

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  • Zhong, Rong (Irene)

Abstract

In today’s interconnected global economy, economic shocks in one country often propagate across borders, causing significant fluctuations worldwide. Constructing a novel country-to-country multiplex network framework, this study demonstrates that financial reporting convergence enhances a country’s resilience to spillover shocks, resulting in a 16.12% and 23.30% decrease in the sensitivity of employment and value-added to shock-induced fluctuations. This resilience effect arises from network diversification, enabling countries to allocate resources more strategically across a broader range of foreign partners. Our findings are robust to multiple identification strategies. Overall, our study underscores the importance of global financial reporting convergence in reducing network risk and strengthening countries’ economic stability in the face of external shocks.

Suggested Citation

  • Zhong, Rong (Irene), 2025. "Global convergence of financial reporting and resilience to fiscal spillover shocks," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:intfin:v:99:y:2025:i:c:s1042443124001768
    DOI: 10.1016/j.intfin.2024.102110
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    More about this item

    Keywords

    Globalization; Network externality; Fiscal policy; Shock transmission; Risk diversification; Financial reporting harmonization;
    All these keywords.

    JEL classification:

    • F00 - International Economics - - General - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

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