The International Financial Reporting Standards 9 financial instruments, information quality and stock returns in the modern technology era
Purpose: This paper investigates the relationship between information quality and stock returns during the International Financial Reporting Standards (IFRS 9) pre-adoption announcements and examines the influence of modern technology on these relationships across 24 emerging countries. Design/methodology/approach: This paper conducts an event study using data obtained from the DataStream, Osiris, International Telecommunication Union (ITU) and the World Bank databases from 2009 to 2014. The non-linear generalized additive model (GAM) was implemented to test the study hypotheses. Findings: Results indicate a significant positive non-linear relationship between low information quality and stock returns during IFRS 9 pre-adoption announcements. This result implies that IFRS 9 announcements have a positive impact on corporations with low pre-adoption quality information. This result is also more pronounced in small rather than large corporations and financial rather than nonfinancial institutions. Furthermore, modern technology plays a significant decisive antecedent role, while industry type has a moderating effect on the relationship between information quality and stock returns. The codified legal system has a positive impact on stock returns across emerging countries. Research limitations/implications: Data unavailability in some emerging countries. Practical implications: The empirical evidence provides useful guidelines for corporate managers, investors, international accounting standard-setters and regulators to improve financial reporting practices. Originality/value: This paper extends the work of Armstrong et al. (2010); Onali et al. (2017) by including the impact of non-linear relationships using GAM analysis and the role of modern technology across emerging countries.
Year of publication: |
2021
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Authors: | ElKelish, Walaa Wahid |
Published in: |
Journal of Applied Accounting Research. - Emerald, ISSN 0967-5426, ZDB-ID 2424157-X. - Vol. 22.2021, 3 (26.01.), p. 465-483
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Publisher: |
Emerald |
Saved in:
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