Sujet : Effects of IFRS Adoption on the Development of Emerging Stock Markets.
In this research, the unit analysis focuses on the country-level. We relied on a sample
consisting of some developing countries selected from the World Bank (2019) website in
order to consider a fair presentation of emerging economies. A number of countries were
excluded because they didn’t establish stock markets yet, others have not well-established
capital markets (for example, Iraq, Libya, Sudan, Syria and Yemen), and data from some
other countries are not available in time series. The final sample consists of a complete data
set for 40 developing countries with stock markets over a period spanning from 2001 to 2017.
Evidence from the literature suggests that IFRS adoption improves stock markets and
constitutes a key in stimulating investments and economic growth in emerging economies.
The adoption of IFRS by the developing countries is not only imperative but also required in order to
access the capital markets at the global level. It is an international trend, which is recognized as best
practice around the world.
Over the past few years, many emerging countries have started to use IFRS due to the
steady rise of multinational companies seeking overseas investment. Thus, a number of accounting
researchers have stated that it would be beneficial for emerging countries to adopt
these standards.
Although the first countries to adopt IFRS were mainly developed countries
characterised by advanced capital markets, IFRS are now also being implemented by
developing countries with emerging capital markets
To address the objective of this research, our empirical analysis based on a dynamic panel
model using the generalized method of moments (GMM) for 40 emerging economies over a period
ranging from 2001 to 2017.
With respect to consequences of IFRS adoption on emerging stock markets development,
we found that higher levels of IFRS adoption affect positively and significantly stock markets
development.
For further checks we referred to analyze the full, partial and rejection of IFRS adoption. We found
that full IFRS adoption by listed firms is significantly associated with emerging stock markets
development. In conclusion, full IFRS adoption may support stock market development. We report
also that partial adoption of IFRS is unimportant or even harmful for stock market development.
Furthermore, we find that IFRS rejection is not significantly associated with emerging stock markets
development.
The paper contributes to the accounting literature on emerging economies by specifically
answering the question of does the adoption of IFRS affects positively emerging stock markets?
Indeed, our findings may contribute to a greater understanding of factors affecting the extent of IFRS
adoption in emerging economies. It narrows the gap in the IFRS adoption literature especially in
regard to emerging economies. It also helps to identify which accounting standard-setting strategy
of IFRS adoption is suitable for the development of emerging stock markets.
The adoption of International Financial Reporting Standards (Hereafter, IFRS) issued
by the International Accounting Standards Board (hereafter, IASB) around the world represents
the most important accounting regulatory change in recent years. The use of IFRS as a
universal financial reporting language is gaining momentum across the globe as more
countries are adopting IFRS or converging their local standards with it.
The IASB’s standards have not only been endorsed by developed economies with
advanced stock markets, but have also been adopted more widely, bringing middle income,
less developed, and emerging economies into the fold of the world economy.
Globalisation has brought to the forefront the problems encountered by differences in
accounting reports used in many countries. Consequently, the quest for international
harmonization of accounting standards and practices has been broadly accepted as expedient
and pragmatic . International Accounting Harmonization relates to the process of reducing the
differences in accounting rules or the diversity that
exists among accounting practices in order to improve the degree of comparability of financial
reports prepared by companies from different countriesThis is in line
with IASB to develop a single set of high-quality accounting standards around the world that
provide investors and others with relevant, transparent, and comparable information.