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Home and foreign host country IFRS adoption and cross-delisting

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Abstract

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.

Résumé

Cette étude examine si et comment l’adoption obligatoire des Normes internationales d’informations financières (international financial reporting standards, IFRS) influence la décision de radiations croisées d’une firme. En utilisant un échantillon complet de radiations croisées internationales, nous montrons que l’adoption obligatoire des IFRS dans les pays hôtes des entreprises multinationales (EMN) cotées dans plusieurs bourses augmente la propension à la radiation des entreprises ne déclarant pas selon les IFRS. En revanche, l’adoption obligatoire des IFRS dans les pays d’origine et d’accueil des firmes cotées dans plusieurs bourses diminue la propension des EMN à la radiation dans la période post-IFRS. Les résultats des tests transversaux suggèrent en outre que la propension croissante à la radiation croisée des firmes nationales qui déclarent selon les PCGR après l’adoption des IFRS dans les pays hôtes étrangers est plus prononcée pour les firmes dont la différence entre les PCGR nationaux et les IFRS est plus importante. Globalement, nos résultats montrent les effets différentiels de l’adoption des IFRS par les EMN dans les pays d’origine/hôtes sur leurs décisions de radiation.

Resumen

Este estudio examina si y cómo la adopción obligatoria de las Normas Internacionales de Información Financiera (NIIF) afecta la decisión de retiro del mercado bursátil simultaneo de una empresa. Usando una muestra exhaustiva de retiros de mercados bursátiles internacionales, mostramos que la adopción obligatoria de las NIIF en los países anfitriones de las empresas multinacionales (EMN) aumenta la propensión al retiro del mercado bursátil de las empresas que no reportan las NIIF. En contraste, la adopción obligatoria de NIIF tanto en los países de origen como en los países anfitriones de las empresas disminuye la propensión al retiro del mercado bursátil de las empresas multinacionales en el periodo posterior a las NIIF. Los resultados de las pruebas transversales además sugieren que el aumento de la propensión al retiro del mercado bursátil simultáneamente en el país de origen y país anfitrión de las empresas que reportan bajo PCGA después de la adopción de las NIIF en países anfitriones extranjeros es más pronunciada para empresas con más diferencias entre las PCGA nacionales y las NIIF. En términos generales, nuestros resultados muestran cómo los factores diferenciales de la adopción de las NIIF en países de origen/anfitriones de las empresas multinacionales en sus decisiones sobre el retiro del mercado bursátil simultáneamente en el país de origen.

Resumo

Este estudo examina se e como a adoção obrigatória de international financial reporting standards (IFRS) afeta a decisão da empresa de deixar de ser duplamente listada. Utilizando uma amostra abrangente de saída de duplas listagens internacionais, mostramos que a adoção obrigatória de IFRS nos países anfitriões de duplas listagens de empresas multinacionais (MNEs) aumenta a propensão de abandono da dupla listagem de empresas que não utilizam IFRS. Por outro lado, a adoção obrigatória de IFRS tanto no país de origem quanto no de destino de empresas duplamente listadas diminui a propensão de saída da dupla listagem de MNEs no período posterior ao IFRS. Os resultados de testes transversais sugerem ainda que o aumento da propensão de saída de dupla listagem de empresas domésticas optantes por relatórios padrão GAAP após a adoção de IFRS em países anfitriões estrangeiros é mais pronunciado para empresas com uma diferença maior entre GAAP doméstico e IFRS. No geral, nossos resultados mostram os efeitos diferenciais da adoção de IFRS em países de origem/destino de MNEs em suas decisões de abandono de dupla listagem.

摘要

这项研究调查是否强制采用国际财务报告标准(IFRS)以及该标准如何影响公司的交叉摘牌决定。通过使用国际交叉摘牌的综合样本, 我们表明, 跨国企业(MNE)的交叉挂牌东道国强制采用IFRS会增加非IFRS报告公司的摘牌倾向。相比之下, 交叉上市公司在本国和东道国强制采用IFRS会降低跨国企业在后IFRS时期的退市倾向。横截面测试的结果进一步表明,对于在国内GAAP和IFRS之间有较大差异的公司, 国内GAAP报告公司在外国东道国采用IFRS后的交叉摘牌倾向增加。总体而言, 我们的结果表明, 在跨国企业的母国/东道国采用IFRS对其交叉摘牌决策的影响不同。

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Acknowledgments

We thank three anonymous referees, Lemma Senbet (editor), and the seminar participants at York University and the 2018 American Accounting Association annual meeting for their helpful suggestions. Xiangting Kong acknowledges the financial support of The National Natural Science Foundation of China (71902201), National Social Science Fund of China (19FGLB048), Guangdong Natural Science Foundation Grant (2018A0303130328), and Guangdong Planning Office of Philosophy and Social Science Grant (GD18CYJ09).

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Authors and Affiliations

  1. Schulich School of Business, York University, Toronto, Canada

    Kiridaran Kanagaretnam

  2. Business School, Center for Accounting, Finance and Institutions, Sun Yat-Sen University, Guangzhou, China

    Xiangting Kong

  3. School of Accounting and Finance, The Hong Kong Polytechnic University, Hong Kong, China

    Albert Tsang

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  1. Kiridaran Kanagaretnam
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  2. Xiangting Kong
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Correspondence to Xiangting Kong or Albert Tsang.

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Accepted by Lemma Senbet, Area Editor, 25 November 2019. This article has been with the authors for seven revisions.

Appendices

Appendix 1

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Table 11 Variable definition
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Appendix 2

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Table 12 Mandatory IFRS adoption date
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Kanagaretnam, K., Kong, X. & Tsang, A. Home and foreign host country IFRS adoption and cross-delisting. J Int Bus Stud 51, 1008–1033 (2020). https://doi.org/10.1057/s41267-019-00300-1

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