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The Impact of Corporate Governance on IFRS Adoption Choices

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  • Arnt Verriest
  • Ann Gaeremynck
  • Daniel B. Thornton

Abstract

We investigate the association between corporate governance strength and EU listed firms' choices with respect to International Financial Reporting Standards (IFRS) adoption in 2005. We measure governance strength by aggregating variables such as board independence, board functioning and audit committee effectiveness. The firms exhibit heterogeneity in both compliance and disclosure quality; some firms do not even meet the minimum disclosure requirements. Regression results show that stronger governance firms disclose more information, comply more fully and use IAS 39's carve-out provision less opportunistically. These findings are germane to accountants, managers and regulators in countries soon to adopt IFRS.

Suggested Citation

  • Arnt Verriest & Ann Gaeremynck & Daniel B. Thornton, 2013. "The Impact of Corporate Governance on IFRS Adoption Choices," European Accounting Review, Taylor & Francis Journals, vol. 22(1), pages 39-77, May.
    • Handle: RePEc:taf:euract:v:22:y:2013:i:1:p:39-77
    DOI: 10.1080/09638180.2011.644699
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    References listed on IDEAS

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    1. Craig Doidge & G. Andrew Karolyi & Karl V. Lins & Darius P. Miller & René M. Stulz, 2009. "Private Benefits of Control, Ownership, and the Cross‐listing Decision," Journal of Finance, American Finance Association, vol. 64(1), pages 425-466, February.
    2. Karl A. Muller & Edward J. Riedl & Thorsten Sellhorn, 2008. "Consequences of Voluntary and Mandatory Fair Value Accounting: Evidence Surrounding IFRS Adoption in the EU Real Estate Industry," Harvard Business School Working Papers 09-033, Harvard Business School.
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