Nested and Spillover Effects of Institutional Environment on IFRS Convergence: A Multilevel Approach and an Agglomeration Economy Perspective
Purpose The objective of this study is to examine how the heterogeneity of the institutional environments within a single country influences International Financial Reporting Standards (IFRS) convergence and earnings quality based on a meso- and multi-level approach. Design/methodology/approach...
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| Format: | Journal Article |
| Published: |
Emerald
2023
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| Online Access: | http://hdl.handle.net/20.500.11937/91788 |
| _version_ | 1848765592475009024 |
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| author | Cao, June |
| author_facet | Cao, June |
| author_sort | Cao, June |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | Purpose
The objective of this study is to examine how the heterogeneity of the institutional environments within a single country influences International Financial Reporting Standards (IFRS) convergence and earnings quality based on a meso- and multi-level approach.
Design/methodology/approach
Using hierarchical linear modeling (HLM) to capture the between-group heteroskedasticity and within-cluster interdependence, this study investigates the simultaneous effect by incorporating institutional factors residing at different hierarchical levels and the interaction effects of factors within the same level on IFRS convergence and earnings quality in the largest IFRS adopter, China.
Findings
The results show that after IFRS convergence (i.e. 2007–2015), earnings quality decreases in terms of conservatism. However, the further analysis indicates that the strong institutional environment could mitigate the negative impact of IFRS on conservatism.
Originality/value
Consistent with the emphasis of heterogeneity within a country by Terracciano et al. (Science, 2005, 310 (5745)), this study indicates that the heterogeneity in the institutional environments and the simultaneous effect of the multilevel institutional environments within a single country cannot be ignored. This study also indicates that, equally important, research methodology plays a substantial role in investigating the outcomes of IFRS convergence. Finally, this study, based on an integrated theory, adopts a meso-paradigm linking macro- and micro-level institutions to provide comprehensive insights into IFRS convergence and conservatism. |
| first_indexed | 2025-11-14T11:37:42Z |
| format | Journal Article |
| id | curtin-20.500.11937-91788 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T11:37:42Z |
| publishDate | 2023 |
| publisher | Emerald |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-917882023-07-19T02:03:05Z Nested and Spillover Effects of Institutional Environment on IFRS Convergence: A Multilevel Approach and an Agglomeration Economy Perspective Cao, June Purpose The objective of this study is to examine how the heterogeneity of the institutional environments within a single country influences International Financial Reporting Standards (IFRS) convergence and earnings quality based on a meso- and multi-level approach. Design/methodology/approach Using hierarchical linear modeling (HLM) to capture the between-group heteroskedasticity and within-cluster interdependence, this study investigates the simultaneous effect by incorporating institutional factors residing at different hierarchical levels and the interaction effects of factors within the same level on IFRS convergence and earnings quality in the largest IFRS adopter, China. Findings The results show that after IFRS convergence (i.e. 2007–2015), earnings quality decreases in terms of conservatism. However, the further analysis indicates that the strong institutional environment could mitigate the negative impact of IFRS on conservatism. Originality/value Consistent with the emphasis of heterogeneity within a country by Terracciano et al. (Science, 2005, 310 (5745)), this study indicates that the heterogeneity in the institutional environments and the simultaneous effect of the multilevel institutional environments within a single country cannot be ignored. This study also indicates that, equally important, research methodology plays a substantial role in investigating the outcomes of IFRS convergence. Finally, this study, based on an integrated theory, adopts a meso-paradigm linking macro- and micro-level institutions to provide comprehensive insights into IFRS convergence and conservatism. 2023 Journal Article http://hdl.handle.net/20.500.11937/91788 10.1108/JAL-02-2023-0022 Emerald fulltext |
| spellingShingle | Cao, June Nested and Spillover Effects of Institutional Environment on IFRS Convergence: A Multilevel Approach and an Agglomeration Economy Perspective |
| title | Nested and Spillover Effects of Institutional Environment on IFRS Convergence: A Multilevel Approach and an Agglomeration Economy Perspective |
| title_full | Nested and Spillover Effects of Institutional Environment on IFRS Convergence: A Multilevel Approach and an Agglomeration Economy Perspective |
| title_fullStr | Nested and Spillover Effects of Institutional Environment on IFRS Convergence: A Multilevel Approach and an Agglomeration Economy Perspective |
| title_full_unstemmed | Nested and Spillover Effects of Institutional Environment on IFRS Convergence: A Multilevel Approach and an Agglomeration Economy Perspective |
| title_short | Nested and Spillover Effects of Institutional Environment on IFRS Convergence: A Multilevel Approach and an Agglomeration Economy Perspective |
| title_sort | nested and spillover effects of institutional environment on ifrs convergence: a multilevel approach and an agglomeration economy perspective |
| url | http://hdl.handle.net/20.500.11937/91788 |