Eliminating Barriers to Cross Border Investing

In: Business and Management

Submitted By bobmarley23q
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1) Better access to foreign capital markets and investment
-Eliminating barriers to cross border investing
Accounting information has a significant influences on the behaviour of investors and financial capital markets. The implementation of IFRS for financial reporting in Australia has allowed for better access to foreign capital markets and investment, eliminating barriers to cross border investing. The major benefits include the potential for lesser information asymmetry (Horton, Serafeim and Serafeim, 2012), improved reporting transparency, reduced information costs, increased comparability, accountability and increase in the quality of financial reporting (Ahmed, Neel and Wang, 2013). Therefore markets become more completive and efficient, benefiting investors.
A major prospective benefit of implementation of IFRS for financial reporting is the increase in accounting comparability. The enhanced comparability is brought together though increased quality and convergence of accounting standards particularly in areas such as Fair value measurements, business combinations and revenue recognition (Jordan, 2013). The increased comparability hence allows Australian business to facilitate lower costs of capital and have better access foreign capital markets and cross-border investing.
On the contrary however comparability may become worse in situations where IFRS implementation is not mandatory and countries have two varying accounting standards. Furthermore the full scope of comparability is yet to be seen as the implementation of IFRS is only been in recent. The full benefits of increased comparability is expected to be seen in the medium-long term and proportionality to the number of firms who adopted it (Williams et al., 2015). Moreover Tarca, n.d, argues that IFRS implementation increases cross-border debt more-so than the equity markets suggesting comparability…...

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