Document Type

Journal article

Source Publication

The Accounting Review

Publication Date

9-1-2012

Volume

87

Issue

5

First Page

1767

Last Page

1789

Keywords

IFRS adoption, information comparability, institutional environment

Abstract

This study examines whether the mandatory adoption of International Financial Reporting Standards (IFRS) in the European Union significantly improves information comparability in 17 European countries. We employ three proxies—the similarity of accounting functions that translate economic events into accounting data, the degree of information transfer, and the similarity of the information content of earnings and of the book value of equity—to measure information comparability. Our results suggest that mandatory IFRS adoption improves cross-country information comparability by making similar things look more alike without making different things look less different. Our results also suggest that both accounting convergence and higher quality information under IFRS are the likely drivers of the comparability improvement. In addition, we find some evidence that cross-country comparability improvement is affected by firms’ institutional environment.

DOI

10.2308/accr-50192

Print ISSN

00014826

E-ISSN

15587967

Publisher Statement

Copyright © 2012 American Accounting Association

Access to external full text or publisher's version may require subscription.

Full-text Version

Accepted Author Manuscript

Recommended Citation

Yip, R. W. Y., & Young, D. (2012). Does mandatory IFRS adoption improve information comparability? The Accounting Review, 87(5), 1767-1789. doi: 10.2308/accr-50192