Munich Personal RePEc Archive

IFRSs for financial instruments, quality of information and capital market’s volatility: an empirical assessment for Eurozone

Cuzman, Ioan and Dima, Bogdan and Dima (Cristea), Stefana Maria (2010): IFRSs for financial instruments, quality of information and capital market’s volatility: an empirical assessment for Eurozone. Published in: Journal of Accounting and Management Information Systems , Vol. 9, No. 2 (32) : pp. 284-304.

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Abstract

This study examines the Eurozone stock markets’ reaction to a number of events associated with the post-implementation amendments of the IFRSs regarding financial instruments (IFRS 7, IFRS 9, IAS 32 and IAS 39). The adoption of these IFRSs is probably one of the most important recent changes in financial information environment. However, in order to contribute to an increase in financial stability, it is necessary to ensure an ex post stability of the regulatory framework. Based on this meta-argument, we have analyzed the inter-linkages between the episodes of higher market volatility and the amendments to the mentioned IFRSs, inside a binary dependent variable model. Overall, our findings suggest that the adoption of the IFRS can lead to a stabilization of European financial markets but this result is not necessary a robust one since investors prefer a higher stability on standards’ contents and application conditions.

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