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The effect of mandatory IFRS adoption on the value of cash: the case of Canada

  • Author / Creator
    Gong,Dan

  • I examine the change in the marginal value of corporate cash in Canadian firms pre and post the adoption of IFRS in Canada. I find that the marginal value of cash decreased significantly in Canadian firms following IFRS adoption. This decrease is significant relative to the change in the value of cash for a matched US control sample. Advocates of IFRS argue that one of its main benefits is the fact that a uniform set of accounting standards should help to facilitate cross-border financing. This improved access to cross-border financing is most plausible for firms with similar foreign counterparts, and is most important for those firms who exhibit the greatest need for external capital. I find that the post-IFRS decrease in the marginal value of cash is most evident for firms that have a larger number of similar firms in non-Canadian IFRS regimes, and for firms with high growth potential and low availability of internal cash. These findings are consistent with the contention that the decrease in the marginal value of cash is attributable to Canadian firms’ improved access to external financing after IFRS adoption.

  • Subjects / Keywords
  • Graduation date
    Spring 2020
  • Type of Item
    Thesis
  • Degree
    Doctor of Philosophy
  • DOI
    https://doi.org/10.7939/r3-cdam-nw83
  • License
    Permission is hereby granted to the University of Alberta Libraries to reproduce single copies of this thesis and to lend or sell such copies for private, scholarly or scientific research purposes only. Where the thesis is converted to, or otherwise made available in digital form, the University of Alberta will advise potential users of the thesis of these terms. The author reserves all other publication and other rights in association with the copyright in the thesis and, except as herein before provided, neither the thesis nor any substantial portion thereof may be printed or otherwise reproduced in any material form whatsoever without the author's prior written permission.