The diffusion of innovation theory and the effects of IFRS adoption by multinational corporations on capital market performance: a cross-country analysis

Ibrahim Elmghaamez, Rexford Attah-boakye, Kweku Adams, Jacob Agyemang

Research output: Contribution to journalArticlepeer-review

Abstract

This article seeks to contribute to International Financial Reporting Standards (IFRS) literature by examining the effects of adopting IFRS on stock market performance worldwide from the diffusion of innovation theory perspective. Our study revealed several interesting findings after using combinations of unique panel data sets from 110 countries worldwide and conducting a robust empirical analysis from 1995 to 2014. First, we found a positive association between late mandatory IFRS adoption and stock market integration in Europe. Second, our findings indicate a significant negative association between early IFRS adoption and the following financial indicators: stock market trading volumes, stock market capitalization, market turnover, and market return. Third, our study reveals an insignificant association between early IFRS adoption and stock price volatility alongside stock market development. Our findings are robust and have significant practical and policy implications for regulators and policymakers of multinational corporations.
Original languageEnglish
Pages (from-to)81-108
Number of pages28
JournalThunderbird International Business Review
Volume64
Issue number1
Early online date30 Oct 2021
DOIs
Publication statusPublished - 1 Jan 2022

Bibliographical note

Publisher Copyright:
© 2021 Wiley Periodicals LLC.

Keywords

  • International Financial Reporting Standards
  • diffusion of innovation theory
  • financial market consequences
  • stock market indicators

ASJC Scopus subject areas

  • Business and International Management
  • Geography, Planning and Development
  • Political Science and International Relations

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