This research investigates how different levels of IFRS adoption affects firms' investment efficiency along with countries' financial development. I estimate an investment Euler equation model in which financial development and IFRS enter as factors to relief firms' financing constraints to decrease the cost of external capital and, hence, improve the efficiency of capital allocation. Here, IFRS is measured as a composite index built according to the information in the jurisdiction profiles published by the IFRS Foundation. The results show firms can decrease their financing constraints by half adopting IFRS even at relatively low levels. Firms in countries with low financial development and adopting IFRS have similar levels of financing constraints as firms in countries with high financial development but no IFRS. The results are important mainly from a policy perspective because it provides evidence that the financial reporting systems is important for economic development, which is to be useful to policymakers and international organizations supporting IFRS adoption.
Comissão Organizadora
Anderson Odias da Silva
Claudia Yoshinaga
Ricardo D. Brito
Felipe Saraiva Iachan
Vinicius Augusto Brunassi Silva
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