Accounting Integration And Comparability: Evidence From Relative Performance Evaluation Around IFRS Adoption

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Executive Summary

For a sample of Continental European firms, changes were studied in the sensitivity of their CEO turnover to foreign peers' accounting performance around mandatory adoption of International Financial Reporting Standards (IFRS). It's found that a post-adoption increase in the use of Relative Performance Evaluation (RPE) based on foreign peers' accounting information, consistent with greater financial reporting comparability associated with mandatory IFRS adoption. The findings are stronger for firms that likely benefit more from improvements in cross-country accounting comparability (those with a relatively small pool of local peers), for firms in highly competitive industries, and when peer firms are from highly correlated economies.

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