Has Adoption of IFRS Increased Non–North American Institutional Investment in the Canadian Stock Markets?

Shahid Ali Khan, Mark Anderson, Hussein Warsame, Michael Wright

Research output: Contribution to journalArticle

Abstract

We investigate whether non–North American (non-NA) institutional investment in firms listed on the Canadian stock markets increased between the pre- and post-IFRS adoption periods relative to such investment in firms listed on the U.S. stock markets. Prior to IFRS adoption, Canada had high-quality financial reporting standards that were similar to the U.S. standards. As consequences of IFRS adoption, Canadian financial statements became more comparable with European and other IFRS country financial statements and less comparable with neighboring U.S. financial statements. Thus, a question of interest is whether the enhanced comparability with non-NA companies was beneficial in terms of attracting non-NA investment to Canadian companies versus U.S. companies. We find that there was no significant change in non-NA institutional investment in Canadian firms relative to U.S. firms for the very largest (fifth quintile) and for smaller (first, second, and third quintiles) Canadian companies. However, intermediate-sized Canadian companies in the fourth size quintile lost non-NA institutional investment relative to their U.S. peer companies, suggesting that non-NA investors cared more about comparability with U.S. peer companies than non-NA peer companies for companies in this size quintile.

Original languageEnglish (US)
Pages (from-to)71-93
Number of pages23
JournalAccounting Perspectives
Volume18
Issue number2
DOIs
StatePublished - Jun 1 2019

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Institutional investment
International Financial Reporting Standards
Stock market
Financial statements
IFRS adoption
Peers
Financial reporting quality
Investors
Canada

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance

Cite this

Khan, Shahid Ali ; Anderson, Mark ; Warsame, Hussein ; Wright, Michael. / Has Adoption of IFRS Increased Non–North American Institutional Investment in the Canadian Stock Markets?. In: Accounting Perspectives. 2019 ; Vol. 18, No. 2. pp. 71-93.
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Has Adoption of IFRS Increased Non–North American Institutional Investment in the Canadian Stock Markets? / Khan, Shahid Ali; Anderson, Mark; Warsame, Hussein; Wright, Michael.

In: Accounting Perspectives, Vol. 18, No. 2, 01.06.2019, p. 71-93.

Research output: Contribution to journalArticle

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