Home and foreign host country IFRS adoption and cross-delisting

This study examines whether and how the mandatory adoption of international financial reporting standards (IFRS) affects a firm’s cross-delisting decision. Using a comprehensive sample of international cross-delistings, we show that mandatory IFRS adoption in the cross-listing host countries of mult...

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Bibliographic Details
Published in:Journal of international business studies 2020-08, Vol.51 (6), p.1008-1033
Main Authors: Kanagaretnam, Kiridaran, Kong, Xiangting, Tsang, Albert
Format: Article
Language:English
Subjects:
Business and Management
Business Strategy/Leadership
Companies
International Business
International Financial Reporting Standards
Management
Mandatory reporting
Multinational corporations
Organization
Propensity
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Summary:This study examines whether and how the mandatory adoption of international financial reporting standards (IFRS) affects a firm’s cross-delisting decision. Using a comprehensive sample of international cross-delistings, we show that mandatory IFRS adoption in the cross-listing host countries of multinational enterprises (MNEs) increases the delisting propensity of non-IFRS-reporting firms. In contrast, mandatory IFRS adoption in both home and host countries of cross-listing firms decreases the delisting propensity of MNEs in the post-IFRS period. The results of cross-sectional tests further suggest that the increased cross-delisting propensity for domestic GAAP-reporting firms post-IFRS adoption in foreign host countries is more pronounced for firms with a greater difference between domestic GAAP and IFRS. Overall, our results show the differential effects of IFRS adoption in home/host countries of MNEs on their cross-delisting decisions.
ISSN:0047-2506
1478-6990
DOI:10.1057/s41267-019-00300-1