Does IFRS convergence bring improvement in firm performance? An empirical analysis

Abstract

ABSTRACT This paper investigates the impact of IFRS adoption on Chinese listed companies. More specifically, this study shows the empirical evidence of the effect of a new set of Chinese accounting standards (CAS) introduced in 2007 on firms’ performance. Analyzing 7020 firm-year observations, this study finds that, compared to pre-IFRS adoption regime, firms’ performance significantly improves after IFRS adoption. A set of sensitivity analysis provides consistent findings about the impact of new CAS on firms’ profitability. As for the implication of international accounting standards, these findings suggest that adoption of global accounting standards is bringing positive change in the capital market through firms’ development in terms of profitability.