Does International Financial Reporting Standards (IFRS) Adoption Promote International Trade?

This study investigates whether the adoption of International Financial Reporting Standards(IFRS)plays any role in a country's volume of international trade.The study centers on the implications of adopting IFRS on international trade from a macroeconomic perspective.Prior studies document that the adoption of IFRS decreases information cost amongst countries.So,therefore,I posit that IFRS adoption is a key driver of international trade.With a total sample of 2,850 country-year observations of 150 countries across the world spanning 1996-2015,this study documents statistically significant positive relationship between IFRS adoption and the flow of international trade.However,this relationship tends to be more pronounced in developing economies,pointing to the fact that IFRS adoption is more beneficial to developing economies than developed countries.Developing economies yearn for financial aid from global lending organizations is a potential driver for IFRS adoption.Using 2SLS instrumental variable model and explicitly considering financial aid,I find results that are in tandem with the baseline regression results.Overall,the findings indicate that IFRS adoption is a major determinant of international trade and should be considered by policymakers and researchers when analyzing the determinants of international trade.