Does International Financial Reporting Standards convergence promote informational efficiency?
This study explores a novel extension of the informational efficiency literature. We examine the impact of the convergence of International Financial Reporting Standards (IFRS) on stock price delay in the Malaysian stock market over a study period2001 to 2016. The study uses Hou and Moskowitz’s (2...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2017
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| Online Access: | http://journalarticle.ukm.my/13296/ http://journalarticle.ukm.my/13296/1/23515-80923-1-PB.pdf |
| _version_ | 1848813236599652352 |
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| author | Tee, Lain-Tze Kew, Si-Roei |
| author_facet | Tee, Lain-Tze Kew, Si-Roei |
| author_sort | Tee, Lain-Tze |
| building | UKM Institutional Repository |
| collection | Online Access |
| description | This study explores a novel extension of the informational efficiency literature. We examine the impact of the convergence of
International Financial Reporting Standards (IFRS) on stock price delay in the Malaysian stock market over a study period2001 to 2016. The study uses Hou and Moskowitz’s (2005) model to measure the stock price delay, an inverse indicator
of informational efficiency. It is found that stocks have less delay on price adjustment to local and global market-wide
information during the convergence of IFRS than before the IFRS was converged. Further, the panel data analysis is applied
to test the empirical linkages between the convergence of IFRS and stock price delay. After controlling for trading volume,
firm size, market volatility and financial crisis, we find strong evidence that the IFRS plays an essential role in promoting
informational efficiency. Specifically, the convergence of IFRS decreases the local and global stock price delay. This is
possibly due to the IFRS convergence promotes a more transparent reporting mechanism, reduces asymmetric information
among market participants and thereby enhances stock price efficiency in incorporating information. The findings will
be of help to policymakers in the effort to increase informational efficiency and those with interest in the subject. |
| first_indexed | 2025-11-15T00:14:59Z |
| format | Article |
| id | oai:generic.eprints.org:13296 |
| institution | Universiti Kebangasaan Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T00:14:59Z |
| publishDate | 2017 |
| publisher | Penerbit Universiti Kebangsaan Malaysia |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | oai:generic.eprints.org:132962019-08-27T21:14:08Z http://journalarticle.ukm.my/13296/ Does International Financial Reporting Standards convergence promote informational efficiency? Tee, Lain-Tze Kew, Si-Roei This study explores a novel extension of the informational efficiency literature. We examine the impact of the convergence of International Financial Reporting Standards (IFRS) on stock price delay in the Malaysian stock market over a study period2001 to 2016. The study uses Hou and Moskowitz’s (2005) model to measure the stock price delay, an inverse indicator of informational efficiency. It is found that stocks have less delay on price adjustment to local and global market-wide information during the convergence of IFRS than before the IFRS was converged. Further, the panel data analysis is applied to test the empirical linkages between the convergence of IFRS and stock price delay. After controlling for trading volume, firm size, market volatility and financial crisis, we find strong evidence that the IFRS plays an essential role in promoting informational efficiency. Specifically, the convergence of IFRS decreases the local and global stock price delay. This is possibly due to the IFRS convergence promotes a more transparent reporting mechanism, reduces asymmetric information among market participants and thereby enhances stock price efficiency in incorporating information. The findings will be of help to policymakers in the effort to increase informational efficiency and those with interest in the subject. Penerbit Universiti Kebangsaan Malaysia 2017 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/13296/1/23515-80923-1-PB.pdf Tee, Lain-Tze and Kew, Si-Roei (2017) Does International Financial Reporting Standards convergence promote informational efficiency? Asian Journal of Accounting and Governance, 8 ((SI)). pp. 77-83. ISSN 2180-3838 http://ejournal.ukm.my/ajac/issue/view/1068/showToc |
| spellingShingle | Tee, Lain-Tze Kew, Si-Roei Does International Financial Reporting Standards convergence promote informational efficiency? |
| title | Does International Financial Reporting Standards convergence promote informational efficiency? |
| title_full | Does International Financial Reporting Standards convergence promote informational efficiency? |
| title_fullStr | Does International Financial Reporting Standards convergence promote informational efficiency? |
| title_full_unstemmed | Does International Financial Reporting Standards convergence promote informational efficiency? |
| title_short | Does International Financial Reporting Standards convergence promote informational efficiency? |
| title_sort | does international financial reporting standards convergence promote informational efficiency? |
| url | http://journalarticle.ukm.my/13296/ http://journalarticle.ukm.my/13296/ http://journalarticle.ukm.my/13296/1/23515-80923-1-PB.pdf |