A Meta-analysis of IFRS Adoption Effects

The adoption of IFRS around the globe has stimulated empirical research that investigates the financial reporting and capital market effects associated with an accounting regime change. These studies differ in their analysis period, jurisdictional setting, and research design, and they report varying findings. We conduct a meta-analysis of IFRS adoption studies investigating financial reporting effects, namely value relevance and earnings transparency in the form of discretionary accruals, as well as capital market effects, specifically the quality of analysts' earnings forecasts. Our findings show that the value relevance of book value of equity has not increased post-IFRS adoption, whereas the value relevance of earnings has generally increased when assessed using price models. Our results also suggest that discretionary accruals have not reduced, but analysts' forecast accuracy has increased significantly post-IFRS adoption. Our findings are not affected materially after controlling for moderating factors including jurisdictional differences such as legal origin, the accounting and auditing enforcement regime, and differences between domestic GAAP and IFRS. However, these associations are moderated by the model used for empirical investigation of value relevance and discretionary accrual effects; they are also moderated by the adoption being voluntary or mandatory. The findings provide evidence to inform policy assessments and deliberations of the financial reporting and capital market effects of adopting IFRS.