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International Accounting

The impact of mandatory IFRS adoption on banks’ share prices: Evidence from the OECD countries

Vol. 24, Iss. 11, NOVEMBER 2021

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Received: 9 September 2021

Received in revised form: 23 September 2021

Accepted: 21 October 2021

Available online: 15 November 2021


JEL Classification: E22, F21, G21, G23, O16

Pages: 1310–1326


Rustam R. ABDURAUPOV Senate of Oliy Majlis of Republic of Uzbekistan, Tashkent, Republic of Uzbekistan


Feruz N. SULTANOV PricewaterhouseCoopers LLC, Tashkent, Republic of Uzbekistan

ORCID id: not available

Abdulla G. IBRAGIMOV Tashkent Regional Center for Retraining and Advanced Training of Public Educators, Tashkent, Republic of Uzbekistan


Subject. The adoption of International Financial Reporting Standards (IFRS) was a significant milestone to unify financial reporting standards. However, there are many conflicting views regarding the impact of IFRS implementation on the investment attractiveness of banks. This put us on analyzing the sensitivity of changes in the equity securities market in terms of information risk and adoption of IFRS.
Objectives. The article aims to explore the relationship between the harmonization of accounting and international standards and the banks’ share prices in eleven OECD countries by analyzing panel data within 1997–2015.
Methods. For the study, we used a set of tests, such as the Ordinary Least Squares regression, Hausman specification test, Variance Inflation Factor, Unit Root test, Panel-Corrected Standard Error regression, and the Breusch-Pagan test.
Results. The obtained results indicate a positive impact of the IFRS adoption on the change in prices for bank shares. In particular, changes in stock prices averaged 64 units. This is explained by the benefits of applying IFRS, which include positive investor expectations, improved financial reporting quality and comparability across countries, and reduced information risk.
Conclusions. The hypothesis of bank share price increase after the IFRS adoption is true for the OECD countries.

Keywords: euro zone, Organization for Economic Cooperation and Development, OECD, IFRS, share prices, banks, equity market


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ISSN 2311-9381 (Online)
ISSN 2073-5081 (Print)

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Vol. 24, Iss. 11
November 2021