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The impact of IFRS Adoption

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Hariem Abdullah

on 2 January 2018

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Transcript of The impact of IFRS Adoption

The impact of IFRS Adoption
on the Stock Market-Growth Nexus

Theory
Causality between Finance and Growth

Supply-leading hypothesis

Finance-lead growth
(Stock Market, Bond Market, Banking sector, and Insurance sector)

Stock Market Development
Vs
Economic Growth
Research Questions
1. Does stock market development enhance economic growth?

2. Does IFRS adoption in stock markets influence the expected relationship of stock market-growth?

3. Is there any difference regarding the expected effect between developed and developing countries?
Objectives
1. Investigating the relationship between stock market development and economic growth.

2. Examining the impact of IFRS adoption on the relationship

3. Differentiating developing and developed countries regarding the points.
Research Hypotheses
H1. Stock market development will have a direct impact on economic growth



H1. Stock market development will have a direct impact on economic growth, which will be moderated by IFRS adoption.
Methodology
(Data)
Sample: Germany and Poland
Duration: 1993-2016
Observations: 192

Sources: Federal Reserve Bank and the Global Economy databases
Hariem ABDULLAH
IFRS Adoption In Europe
International Financial Reporting Standards

Europe has adopted since 2005
in all
Stock Markets
(Model Specification)
Results
Test Hypothesis 1
Test Hypothesis 2
Discussions
Implications:
The study contributes significantly to the literature because of adding a new variable to the previously conducted model


limitations and recommendations:
the extent of generalizability (Germany and Poland)

this study does not consider the level of compliance to IFRS codes



Support Hypothesis 1
Support Hypothesis 2 BUT with different results for the direction
Results
The findings suggest that stock market development has effected economic growth over 1993-2016 in both countries, but with different degree of impact.

It is also found that IFRS adoption has different extent of impact on the relationship for each country.
Full transcript