Essays on the Impact of the Adoption of IFRS on Accounting Information Content, Liquidity and Institutional Investment in Canadian Stock Markets
Abstract
In my thesis I examine the trade-offs of implementing International Financial Reporting Standards (IFRS) in Canada. My thesis consists of three papers.
In my first paper, I examine whether IFRS adoption resulted in greater information content in earnings announcements for TSX and TSXV firms in Canada. I contrast the senior and junior exchange to evaluate the differential impact of IFRS within a single country as these two stock markets represent different information environments for local investors. I find that information content of earnings announcements, measured by abnormal volatility and abnormal volume during the announcement period, increased for TSX firms following the adoption of IFRS. These results indicate that IFRS earnings announcements increased the value-relevant information provided to investors possibly due to the more forward-looking measurement emphasis under IFRS. I find some evidence that information content of earnings was lower for TSXV firms in the post-IFRS adoption period. I cautiously suggest that this may reflect a greater reliance of TSXV investors on realized earnings information.
In my second paper, I examine whether average liquidity for three groups of firms - Canadian, non-US international and U.S. firms - traded on Canadian stock exchanges increased or decreased after mandatory adoption of IFRS in Canada. I consider two competing forces affecting liquidity from IFRS adoption: enhanced comparability of firms within industries that span international boundaries and less tailoring of financial reporting to satisfy local investor needs. I find that liquidity decreased for Canadian and U.S. firms, suggesting that the benefits of global comparability were not sufficient to offset the loss of local investor accommodation. However, I find some evidence that liquidity improved for non-U.S. international firms suggesting that enhanced comparability of firms within industries did span international boundaries.
In my final paper, I examine whether non-U.S. international institutional investment, measured by percentage ownership by international investors and number of international investors, in Canadian firms increased in the post-IFRS adoption period. I used U.S. firms as my control sample. Results show that Canada did not benefit from higher non-U.S. international institutional investment in the Canadian-listed firms in the post-IFRS period compared to U.S. firms.
Description
Keywords
Education--Business, Business Administration, Accounting, Business Administration--Management
Citation
Khan, S. (2016). Essays on the Impact of the Adoption of IFRS on Accounting Information Content, Liquidity and Institutional Investment in Canadian Stock Markets (Doctoral thesis, University of Calgary, Calgary, Canada). Retrieved from https://prism.ucalgary.ca. doi:10.11575/PRISM/25951