Financial market consequences of early adoption of international standards on auditing: international evidence

What is it about?

As ISAs adoption by listed firms increases over time, foreign investors are more willing to engage in investing in different stock markets around the world, which leads to enhance the international integration among stock markets, thus improve stock market capitalization and stock market returns. We test DOI theory upon ISAs adoption using a range of financial market consequences in 110 countries over the period from 1995 to 2014. We find that the reduction of stock market volatility is mainly caused by the increase of ISAs adoption by different countries, especially for the early adopters of ISAs.

Featured Image