Authors

Research question

Sample

Main findings

Amiram (2012) [13]

・ Investigates the association between the IFRS adoption and foreign investment decisions.

・ Sample of 105 (104 in table) countries of which 53 investor and 81 investee countries with 13,992 country year observations in 2006.

・ Foreign investments increase in countries that adopted IFRS and this increase is driven by the familiarity of IFRS.

・ Foreign equity portfolio investments (FPI) increase in countries that adopt IFRS.

・ Accounting information plays a role in foreign portfolio investment decisions.

・ Familiarity of accounting standards is the source of association between IFRS adoption and foreign investment decisions.

Biddle, Callahan, Hong, and Knowles (2011, March 1, 2013, August 31, 2015) [14]

・ Examine whether International Financial Reporting Standards (IFRS) enhanced firm-level capital investment efficiency.

・ Examine associations between IFRS adoptions and two measures of firm-level capital investment efficiency: investment-cash flow sensitivity and value-enhancing risk taking.

・ Sample of 7220 firms from 26 countries and 31,476 firm year observations from 2001 to 2008 (August 31, 2015).

・ Mandatory IFRS adoption enhance capital investment efficiency.

・ After the mandatory adoption of IFRS, firms’ investment policy is associated with a shift towards a risk-adjusted optimal level while their investment-cash flow sensitivity decreases.

・ The study (August 31, 2015) extends prior findings that associations between IFRS adoptions and capital investment efficiency are stronger for countries with weaker legal systems and protections, more concentrated corporate ownership, and prior reporting standards that differ more from IFRS.

Brüggemann, Daske, Homburg, and Pope (2012) [16]

・ Examine the impact of global IFRS adoption on cross-border equity investment by individual investors.

・ Sample of Open Market Universe (Datastream (DS) Universe) 5637 (22,280) firms and 43,671 (217,772) firm periods from 31 countries for period 2002-2008.

・ Stocks experience a significant increase in Open Market trading volume following adoption of IFRS.

・ Global IFRS adoption enhances cross-border equity investments by individual investors. However, this effect does not materialize equally across stocks due individual investors’ limited attention.

・ Individual investors ignore the complex interaction between IFRS adoption and the institutional environment of the stocks, because they tend to be less sophisticated than their institutional peers and they predict that individual investors focus on those stocks within the IFRS-enhanced choice set that catch their attention, for example, through increased media coverage.

Chen, Ding and Xu, (2014) [20]

・ Investigate if the convergence of domestic and IFRS promotes FDI as it reduces information processing costs for foreign investors.

・ Investigate also if the effect of reduced information costs is stronger for partner countries whose accounting systems showed greater pre-convergence differences because they magnify the facilitating role of accounting standard convergence for FDI.

・ Sample of bilateral FDI data from 30 OECD countries between 2000 and 2005.

・ The convergence of domestic accounting standards and IFRS promotes FDI as it reduces information processing costs for foreign investors.

・ The effect of reduced information costs is stronger for partner countries whose accounting systems showed greater pre-convergence differences because they magnify the facilitating role of accounting standard convergence for FDI.