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Do Accounting Standards Matter for Productivity?
Author(s) -
Banker Rajiv,
Huang Rong,
Li Yinghua,
Zhao Sha
Publication year - 2021
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/poms.13257
Subject(s) - total factor productivity , comparability , productivity , accounting , international financial reporting standards , convergence (economics) , business , shock (circulatory) , accounting information system , growth accounting , economics , monetary economics , macroeconomics , medicine , mathematics , combinatorics
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.