This thesis examines the determinants and associations of accounting comparability in the context of the mandatory adoption of International Financial Reporting Standards (IFRS) as of 2005 in Australia and the European Union (EU). Comparability is an important attribute of financial reporting that is desirable because it enhances the usefulness of financial accounting information. This thesis examines the relative importance of accounting standards, firms’ reporting incentives and institutional features in determining cross-country accounting comparability. As capital market participants are expected to benefit from enhanced comparability, this thesis also investigates the role of cross-country accounting comparability in influencing a firm’s information environment in the capital market. The first empirical study examines the impact of mandatory IFRS adoption on cross-country accounting comparability. Using a sample of matched firm-pairs from Australia and the EU, the results show that mandatory IFRS adoption improves cross-country accounting comparability. This is evidenced by the extent to which economically similar events and transactions are reflected similarly without any discernible impact on economically dissimilar events and transactions. The results also reveal that the comparability benefit of mandatory IFRS adoption is more pronounced for matched firm-pairs with different legal origins. The findings of this empirical study suggest that adopting a uniform set of accounting standards is crucial in achieving comparability. The second empirical study explores the interaction of firms’ reporting incentives, country-level institutional factors and mandatory IFRS adoption on cross-country accounting comparability. The results show that the improvement in cross-country accounting comparability resulting from mandatory IFRS adoption persists even after controlling for the dissimilarity of firms’ reporting incentives and institutional differences between similar firms. This is despite findings demonstrating that cross-country accounting comparability is diminished by greater dissimilarity in reporting incentives and institutional differences between similar firms and after mandatory adoption of IFRS. Nevertheless, the results further show that the comparability improvement following mandatory IFRS adoption for similar firms when some EU countries concurrently made substantive enforcement changes is pronounced only after the dissimilarity of firms’ reporting incentives is considered. The findings suggest that cross-country accounting comparability is partly determined by the alignment of firm-specific and country-level factors even when a common set of accounting standards is in place. The third study examines the impact of accounting comparability on the information content of stock prices. Using stock return synchronicity as a proxy, the results reveal that accounting comparability decreases stock return synchronicity and that this relation is weakened by mandatory IFRS adoption. The findings suggest that the usefulness of accounting comparability in facilitating the incorporation of firm-specific information into stock prices is reduced by a greater amount of marketwide information becoming available via mandatory IFRS adoption. The study finds that this is likely because of increased analyst coverage encouraging the production of marketwide information for firms with greater comparability after adopting IFRS.Thesis (Ph.D.) -- University of Adelaide, Business School, 202
