The mediating effect of information asymmetry on IFRS and foreign direct investment

Maryam Yousefinejad, Azlina Ahmad, Mohd Fairuz Md. Salleh, Ruzita Abdul Rahim, Hafizh Md Azam

Research output: Contribution to journalArticle

Abstract

This study examines the mediating effect of information asymmetry on the relationship between IFRS and FDI inflows in ASEAN countries. The hypotheses were empirically tested using a sample of ASEAN 6 from 2001 to 2016 and for information asymmetry measurement, this study applies Bid-ask spread and Illiquidity measurement introduced by Amihud (2002). This study also fulfils the three steps required for mediation analyses based on casual steps approach. The results indicate that information asymmetry mediates the relationship between IFRS and FDI inflows. Additionally, this study also demonstrates that IFRS adoption is a determinant factor for FDI inflows and eventually economic growth. This study provides evidence regarding the outcomes of IFRS from the aspects of information asymmetry reduction and FDI inflows enhancement. Therefore, the outcomes of this study may be useful for adopter and non-adopter countries to understand the economic consequences of IFRS. The findings may provide important inputs to policy makers of Indonesia and Vietnam who are contemplating adopting IFRS. The positive relationship between IFRS and FDI inflows, provides evidence that IFRS is an important determinant of FDI inflows and eventually economic growth.

Original languageEnglish
Pages (from-to)641-656
Number of pages16
JournalInternational Journal of Economics and Management
Volume12
Issue number2
Publication statusPublished - 1 Jan 2018

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International Financial Reporting Standards
Mediating effect
Foreign direct investment
Asymmetry of information
Information asymmetry
Economic growth
IFRS adoption
Politicians
Economic consequences
Determinant factors
Indonesia
Illiquidity
Bid/ask spread
Enhancement
Mediation

Keywords

  • ASEAN countries
  • Casual steps approach
  • Foreign direct investmet
  • IFRS
  • Information asymmetry

ASJC Scopus subject areas

  • Business and International Management
  • Economics, Econometrics and Finance(all)
  • Strategy and Management

Cite this

The mediating effect of information asymmetry on IFRS and foreign direct investment. / Yousefinejad, Maryam; Ahmad, Azlina; Md. Salleh, Mohd Fairuz; Abdul Rahim, Ruzita; Azam, Hafizh Md.

In: International Journal of Economics and Management, Vol. 12, No. 2, 01.01.2018, p. 641-656.

Research output: Contribution to journalArticle

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