Introduction

Abstract

Regulation EU No. 1606/2002 requires most listed companies in the European Union (EU) to prepare their consolidated accounts according to International Financial Reporting Standards (IFRS) from fiscal year 2005 onwards (EC, 2002; henceforth the IAS Regulation). This regulation is part of an unprecedented accounting experiment that has seen IFRS reporting being currently mandated in almost 100 countries around the world. Even the US Securities and Exchange Commission (SEC) is actively considering to incorporate IFRS into the financial reporting system for US issuers. Regulators justify the move towards IFRS by the expectation that collective adoption of a single set of global accounting standards will trigger desirable economic consequences in capital markets and at the macroeconomic level. For example, the IAS Regulation explicitly aims „to ensure a high degree of transparency and comparability of financial statements and hence an efficient functioning of the Community capital market and the Internal Market“ (EC, 2002, Art. 1). There is an emerging stream of empirical literature that evaluates whether these objectives have been met. This thesis contributes to this stream of literature by providing three essays on the economic consequences of mandatory IFRS reporting around the world. While the first two essays focus on the response to the adoption process, the third essay analyzes the effects of a subsequent change in IFRS accounting rules.