Economic and informational consequences of voluntary adoption of international financing reporting standards

This dissertation consists of three related studies on the consequences of voluntary adoption of international financial reporting standards (IFRS). The first study investigates the effect of IFRS adoption on stock price synchronicity. The empirical results support the argument that IFRS adoption improves information environment and encourages capitalization of firm-specific information into stock prices. As a result, IFRS adopters are associated with lower stock price synchronicity and more comprehensive adoption of IFRS reduces synchronicity to a larger extent. Moreover, I find that the synchronicity-reducing effect of IFRS adoption is attenuated for firms with high analyst following. In this study, I also find some evidence that synchronicity reducing effect of IFRS adoption is stronger for firms from weak institutional infrastructure countries than those from strong institutional infrastructure countries, implying a substitute effect between firm level governance and country level governance.;The second study examines effect of IFRS adoption on analyst following and information quality. I find that IFRS adoption attracts more analysts and improves precision of information. Moreover, results in this study document a complementary effect between public information and private information. While both IFRS adoption and analyst following enhance information quality, I find that IFRS adoption generates more public information and analyst following generates more private information.;The third study tests whether IFRS adopters enjoy lower cost of raising equity capital. Results suggest that cost of equity is significantly lower for the IFRS adopters than for the non-adopters, irrespective of a country's institutional infrastructure. Moreover, cost of capital reducing effect of IFRS adoption is greater when the IFRS adopters are from countries with weak institutional infrastructures than when they are from countries with strong infrastructure, implying a substitute effect between firm level governance and country level governance, which is consistent with the findings in the first study.;Keywords. International Financial Reporting Standards, Stock Price Synchronicity, Analyst Following, Information Quality, Cost of Equity, Institutional Infrastructure...