EXPLORING THE RELATIONSHIP BETWEEN ECONOMIC DEVELOPMENT AND IFRS INFORMATION COMPARABILITY

Abstract

This paper examines the relationship between the level of economic development and International Financial Reporting Standards (IFRS) information comparability following the standards adoption in China in 2007. Using a sample of matched firm-pairs from Mainland China and Hong Kong, the study shows that comparability is higher for companies from more developed regions in the pre-convergence period, but not in the post-convergence periods. The study also highlights that companies based in less developed regions with code law legal jurisdiction have more to gain from IFRS convergence, contrary to popular belief. The investigation extends to testing the effect of within-country variations in economic development on IFRS information comparability, which has not been addressed in the comparability literature. This study contributes to the understanding of the factors influencing IFRS comparability, which should be factored into future cross-country studies