Do Accounting Standards Matter for Productivity?

Rajiv Banker, Rong Huang, Yinghua Li, Sha Zhao

Research output: Contribution to journalArticlepeer-review

Abstract

In this study, we examine whether productivity shifts when accounting standards change. Using mandatory International Financial Reporting Standards (IFRS) as a shock to the accounting regime, we examine the changes in country-level productivity. We find that mandatory IFRS-adopting countries experience significant increases in total factor productivity (TFP) and labor productivity. The post-adoption productivity improvements are greater for countries without IFRS convergence. Further, TFP increases more for countries that experience a larger increase in industry comparability. Taken together, the evidence suggests that the new IFRS accounting regime increases economic productivity via improving information environments and facilitating internal firm decisions.

Original languageEnglish (US)
Pages (from-to)68-84
Number of pages17
JournalProduction and Operations Management
Volume30
Issue number1
DOIs
StatePublished - Jan 2021

Keywords

  • IFRS
  • accounting standards
  • information environments
  • productivity

ASJC Scopus subject areas

  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Management of Technology and Innovation

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