Does mandatory IFRS adoption facilate debt financing?

Annita Florou, Urska Kosi

Publikation: Wissenschaftliche FachzeitschriftOriginalbeitrag in FachzeitschriftBegutachtung

Abstract

We examine whether the mandated introduction of International Financial Reporting Standards (IFRS) influences access to debt markets and the cost of debt. Using a global sample of public bonds and private loans we find that mandatory IFRS adopters are more likely to issue bonds rather than to borrow privately in the post-IFRS period. We also find that mandatory IFRS adopters pay lower bond yield spreads, but not loan spreads, after the mandate. These findings are consistent with debt providers responding positively to financial reporting of higher quality and enhanced comparability, but only in the case of bond investors where reliance on publicly available financial statements dominates private communication. Finally, we document that the observed debt market benefits are present in EU countries that did not experience concurrent institutional changes and in non-EU countries. These results mitigate concerns regarding potential confounding effects from other non-IFRS-related factors.
OriginalspracheEnglisch
Seiten (von - bis)1407 - 1456
FachzeitschriftReview of Accounting Studies
Jahrgang20
Ausgabenummer4
DOIs
PublikationsstatusVeröffentlicht - 2015

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