IFRS adoption and firms’ opacity around the world:: What factors affect this relationship?

Samuel Mongrut; Manuel Tello Marín; Maria del Carmen Torres Postigo; Darcy Fuenzalida O’Shee

doi:10.1108/JEFAS-02-2020-0060

IFRS adoption and firms’ opacity around the world: What factors affect this relationship?

Samuel Mongrut
, Manuel Tello Marín
, Maria del Carmen Torres Postigo
, Darcy Fuenzalida O’Shee

Research output: Contribution to journal › Article in a journal › peer-review

5 Scopus citations

Abstract

Purpose: This paper aims to identify what are the moderating factors affecting the relationship between firms’ adoption of international financial and reporting standards (IFRS) and the firm’s opacity. Design/methodology/approach: This study uses the meta-analysis methodology from Hunter et al. (1982) to find if the mere IFRS adoption reduces firm’s opacity and a meta-regression from Stanley and Jarrell (1989) to identify the moderating factors that may influence this relationship. Findings: Contrary to previous studies, this study finds a low, negative and nonsignificant correlation between IFRS adoption and firms’ opacity, but this relationship depends on the geographical region. Using 34 results from 28 studies from different continents published between 2005 and 2018 this study finds that IFRS adoption reduces opacity in countries with common law (COML) and with more authorities’ oversight and power to enforce the rules. Originality/value: This study finds two institutional commonalities between different previous studies that intend to assess the impact of the IFRS adoption upon firms’ opacity: the legal system and the authorities’ oversight power.

Original language	English
Pages (from-to)	7-21
Number of pages	15
Journal	Journal of Economics, Finance and Administrative Science
Volume	26
Issue number	51
Early online date	18 Jun 2021
DOIs	https://doi.org/10.1108/JEFAS-02-2020-0060
State	Published - 13 Jul 2021

Bibliographical note

Publisher Copyright:
© 2021, Samuel Arturo Mongrut, Manuel Tello Marín, Maria del Carmen Torres Postigo and Darcy Fuenzalida O’Shee.

Publisher Copyright:
© 2021, Samuel Arturo Mongrut, Manuel Tello Marín, Maria del Carmen Torres Postigo and Darcy Fuenzalida O’Shee.

Publisher Copyright:
© 2021, Samuel Arturo Mongrut, Manuel Tello Marín, Maria del Carmen Torres Postigo and Darcy Fuenzalida O’Shee.

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 9 Industry, Innovation, and Infrastructure
SDG 17 Partnerships for the Goals

Keywords

Earnings management
IFRS
Opacity

Access to Document

10.1108/JEFAS-02-2020-0060

Cite this

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title = "IFRS adoption and firms{\textquoteright} opacity around the world:: What factors affect this relationship?",

abstract = "Purpose: This paper aims to identify what are the moderating factors affecting the relationship between firms{\textquoteright} adoption of international financial and reporting standards (IFRS) and the firm{\textquoteright}s opacity. Design/methodology/approach: This study uses the meta-analysis methodology from Hunter et al. (1982) to find if the mere IFRS adoption reduces firm{\textquoteright}s opacity and a meta-regression from Stanley and Jarrell (1989) to identify the moderating factors that may influence this relationship. Findings: Contrary to previous studies, this study finds a low, negative and nonsignificant correlation between IFRS adoption and firms{\textquoteright} opacity, but this relationship depends on the geographical region. Using 34 results from 28 studies from different continents published between 2005 and 2018 this study finds that IFRS adoption reduces opacity in countries with common law (COML) and with more authorities{\textquoteright} oversight and power to enforce the rules. Originality/value: This study finds two institutional commonalities between different previous studies that intend to assess the impact of the IFRS adoption upon firms{\textquoteright} opacity: the legal system and the authorities{\textquoteright} oversight power. ",

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author = "Samuel Mongrut and \{Tello Mar{\'i}n\}, Manuel and \{Torres Postigo\}, \{Maria del Carmen\} and \{Fuenzalida O{\textquoteright}Shee\}, Darcy",

note = "Publisher Copyright: {\textcopyright} 2021, Samuel Arturo Mongrut, Manuel Tello Mar{\'i}n, Maria del Carmen Torres Postigo and Darcy Fuenzalida O{\textquoteright}Shee. Funding Information: The authors wish to acknowledge the support of the NOSC Independent Research Program (Dr. A. Gordon) and the NOSC STRAP Program (S.F. Sullivan). They also appreciate the helpful comments of Prof. J. R. Bunch of the University of California at San Diego. Publisher Copyright: {\textcopyright} 2021, Samuel Arturo Mongrut, Manuel Tello Mar{\'i}n, Maria del Carmen Torres Postigo and Darcy Fuenzalida O{\textquoteright}Shee. Funding Information: The authors wish to acknowledge the support of the NOSC Independent Research Program (Dr. A. Gordon) and the NOSC STRAP Program (S.F. Sullivan). They also appreciate the helpful comments of Prof. J. R. Bunch of the University of California at San Diego. Publisher Copyright: {\textcopyright} 2021, Samuel Arturo Mongrut, Manuel Tello Mar{\'i}n, Maria del Carmen Torres Postigo and Darcy Fuenzalida O{\textquoteright}Shee.",

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N2 - Purpose: This paper aims to identify what are the moderating factors affecting the relationship between firms’ adoption of international financial and reporting standards (IFRS) and the firm’s opacity. Design/methodology/approach: This study uses the meta-analysis methodology from Hunter et al. (1982) to find if the mere IFRS adoption reduces firm’s opacity and a meta-regression from Stanley and Jarrell (1989) to identify the moderating factors that may influence this relationship. Findings: Contrary to previous studies, this study finds a low, negative and nonsignificant correlation between IFRS adoption and firms’ opacity, but this relationship depends on the geographical region. Using 34 results from 28 studies from different continents published between 2005 and 2018 this study finds that IFRS adoption reduces opacity in countries with common law (COML) and with more authorities’ oversight and power to enforce the rules. Originality/value: This study finds two institutional commonalities between different previous studies that intend to assess the impact of the IFRS adoption upon firms’ opacity: the legal system and the authorities’ oversight power.

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