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Debt Financing and Voluntary Adoption of the International Financial Reporting Standards: Evidence from Korean Unlisted Firms

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  • Woon-Oh Jung
  • Sung Ook Park
  • Heesun Chung

Abstract

We investigate the effect of debt financing on the voluntary adoption of the International Financial Reporting Standards (IFRS) by unlisted firms and such adoption’s effect on bond credit rating. We find that unlisted firms with public debts are more likely to voluntarily adopt IFRS. Subsequent to the voluntary application of IFRS, the unlisted firms exhibit, on average, enhanced credit ratings. These findings suggest that the public debt market’s demand for high-quality financial reporting may drive those unlisted firms to voluntarily adopt IFRS. Furthermore, rating agencies seem to reward such firms by elevating their bond credit ratings.

Suggested Citation

  • Woon-Oh Jung & Sung Ook Park & Heesun Chung, 2016. "Debt Financing and Voluntary Adoption of the International Financial Reporting Standards: Evidence from Korean Unlisted Firms," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(1), pages 39-51, January.
    • Handle: RePEc:mes:emfitr:v:52:y:2016:i:1:p:39-51
    DOI: 10.1080/1540496X.2015.1062301
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