International Financial Reporting Standards and Market Efficiency: A European Perspective
We investigate how the voluntary adoption of the International Financial Reporting Standards (IFRS) prior to 2005 has contributed to the informational efficiency regarding pan-European stock markets. We find evidence of the potential usefulness of the IFRS for making financial decisions. Taking a sample of IFRS early adopters, our study indicates that the new standards clearly support the semistrong-form of market efficiency for the firms disclosing good accounting news, while a more progressive diffusion of information and a penalty effect occur for the bad news firms. There is also evidence of an improvement in information asymmetries, thanks to the adoption of the IFRS, providing support for their contribution to the strong-form of market efficiency.
|Date of creation:||2006|
|Contact details of provider:|| Postal: Bâtiment K2, 4, rue Albert Borschette, L-1246 Luxembourg-Kirchberg|
Phone: +352 46 66 44 6335
Fax: +352 46 66 44 6811
Web page: http://wwwen.uni.lu/luxembourg_school_of_finance
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Brown, Stephen J. & Warner, Jerold B., 1985. "Using daily stock returns : The case of event studies," Journal of Financial Economics, Elsevier, vol. 14(1), pages 3-31, March.
- Ke, Bin & Ramalingegowda, Santhosh, 2005. "Do institutional investors exploit the post-earnings announcement drift?," Journal of Accounting and Economics, Elsevier, vol. 39(1), pages 25-53, February.
- Scholes, Myron & Williams, Joseph, 1977. "Estimating betas from nonsynchronous data," Journal of Financial Economics, Elsevier, vol. 5(3), pages 309-327, December.
- David Aboody, 2002. "Measuring Value Relevance in a (Possibly) Inefficient Market," Journal of Accounting Research, Wiley Blackwell, vol. 40(4), pages 965-986, 09.
- George, Thomas J & Kaul, Gautam & Nimalendran, M, 1991. "Estimation of the Bid-Ask Spread and Its Components: A New Approach," Review of Financial Studies, Society for Financial Studies, vol. 4(4), pages 623-656.
- Taylor, Martin E. & Jones, Roberta Ann, 1999. "The use of International Accounting Standards terminology, a survey of IAS compliance disclosure," The International Journal of Accounting, Elsevier, vol. 34(4), pages 557-570, 010.
- Hirshleifer, David & Teoh, Siew Hong, 2003. "Limited attention, information disclosure, and financial reporting," Journal of Accounting and Economics, Elsevier, vol. 36(1-3), pages 337-386, December.
- repec:bla:joares:v:6:y:1968:i::p:67-92 is not listed on IDEAS
- Schadewitz, Hannu J. & Kanto, Antti J., 2002. "The impact of disclosure on the market response to reported earnings," Scandinavian Journal of Management, Elsevier, vol. 18(4), pages 521-542, December.
- Paul Rosenfield, 2005. "The focus of attention in financial reporting," Abacus, Accounting Foundation, University of Sydney, vol. 41(1), pages 1-20.
- Kothari, S. P., 2001. "Capital markets research in accounting," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 105-231, September.
- Pascal Dumontier & Bernard Raffournier, 2002. "Accounting and capital markets: a survey of the European evidence," European Accounting Review, Taylor & Francis Journals, vol. 11(1), pages 119-151.
- Garfinkel, Jon A. & Nimalendran, M., 2003. "Market Structure and Trader Anonymity: An Analysis of Insider Trading," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(03), pages 591-610, September.
- Sung-Hun Kim & Joseph P. Ogden, 1996. "Determinants of the components of bid-ask spreads on stocks," European Financial Management, European Financial Management Association, vol. 2(1), pages 127-145.
- Lambert, R. A., 2003. "Discussion of 'limited attention, information disclosure, and financial reporting'," Journal of Accounting and Economics, Elsevier, vol. 36(1-3), pages 387-400, December.
- repec:bla:joares:v:6:y:1968:i:2:p:159-178 is not listed on IDEAS
- Slovic, Paul & Finucane, Melissa & Peters, Ellen & MacGregor, Donald G., 2002. "Rational actors or rational fools: implications of the affect heuristic for behavioral economics," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 31(4), pages 329-342.
When requesting a correction, please mention this item's handle: RePEc:crf:wpaper:06-04. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Martine Zenner)
If references are entirely missing, you can add them using this form.