Impact of implementing Uniform Accounting Standards on Equity Investments
Abstract
Today’s global economy facilitates investment diversification in equity securities globally. The global diversity in accounting principles makes it difficult to assess various investment alternatives from non-host countries. This led to a need for uniform international accounting standards that are now being used by more than 100 countries as of 2017. The International Financial Reporting Standards (IFRS) were implemented in Australia in 2005. The purpose of this study was to determine the effects of the IFRS implementation on cross-listing of Australian companies and trading volume for these companies between 2002 and 2008. The sample of companies included in this study were all Australian companies listed on the Australian Securities Exchange (ASX) as of January 1, 2002, which were still listed on the ASX as of December 31, 2008. The test results based on the Australian cross-listed companies affirm that the implementation of IFRS improves access to equity capital.