Karpuz, A, Kim, K and Ozkan, N (2020) Does financial reporting regulation influence the value of cash holdings? Journal of Empirical Finance, 59. pp. 52-67. ISSN 0927-5398
Abstract
We investigate how the value of cash holdings changes following the mandatory adoption of International Financial Reporting Standards (IFRS), which is viewed as an exogenous shock to information asymmetry between firms and outside investors. Using firm-level data from 47 countries, we find that mandatory IFRS adoption has a negative and significant impact on the value of cash holdings. This result suggests that investors reduce their valuation of cash holdings when firms can have access to external financing at a lower cost under IFRS. The negative effect of IFRS is concentrated among financially constrained firms. Furthermore, we show that the effect is more pronounced in countries with strong legal enforcement. Overall, our evidence highlights that financial reporting regulation can have a significant effect on how outside investors value corporate cash holdings across countries.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | Crown Copyright © 2020 Published by Elsevier B.V. All rights reserved.This is an author produced version of an article, published in Journal of Empirical Finance. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | International Financial Reporting Standards (IFRS); Market value of cash holdings; Cash holdings |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Accounting & Finance Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 05 Dec 2022 11:46 |
Last Modified: | 05 Dec 2022 11:46 |
Status: | Published |
Publisher: | Elsevier |
Identification Number: | 10.1016/j.jempfin.2020.09.004 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:193701 |