Financial Reporting Regulation, Information Asymmetry and Financing Decisions around the World
We study the influence of a major reform in financial reporting regulation - the adoption of the International Financial Reporting Standards (IFRS) - on financial decisions around the world. Using IFRS as a setting with exogenous variation in information asymmetry, and relying on a pecking order theory framework, we test whether post-IFRS firms: (i) will be more likely to seek external (as opposed to internal) financing and (ii) conditional on raising external capital, will be relatively more likely to issue equity than debt. Further, we also study changes in financing choices conditional on financial distress. Our findings highlight the importance of disclosure regulation in explaining financing policies around the world.
The associated data (Excel spreadsheet and Access database) for the Symmetry in European Folk Costumes paper can be found in Deep Blue Data at: http://dx.doi.org/10.7302/Z2HD7SKC