Did mandatory IFRS adoption affect the cost of capital in Latin American countries?

André Aroldo Freitas de Moura, Aljaohra Altuwaijri, Jairaj Gupta

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)
234 Downloads (Pure)


This study investigates whether mandatory adoption of International Financial Reporting Standards (IFRS) has affected the long-term cost of equity and debt in Latin America, where the enforcement of accounting standards and investor protection mechanisms are weak in comparison to developed nations. Analyzing a sample of firms from Argentina, Brazil, Chile, Mexico, and Peru, we show that mandatory IFRS adoption led to reduction in the cost of equity even after controlling for firm-level reporting incentives. Test results also show that the cost of debt was reduced significantly after the IFRS adoption. Our results suggest that enhanced disclosure and comparability stemming from IFRS in comparison to previous domestic accounting standards helped to mitigate the information asymmetry problem, and resulted in positive economic consequences for Latin American firms.
Original languageEnglish
Article number100301
Pages (from-to)1-18
Number of pages18
JournalJournal of International Accounting, Auditing and Taxation
Early online date15 Feb 2020
Publication statusPublished - Mar 2020


  • IFRS
  • Cost of equity
  • Cost of debt
  • Investors
  • Debt holders
  • Latin American structuralism


Dive into the research topics of 'Did mandatory IFRS adoption affect the cost of capital in Latin American countries?'. Together they form a unique fingerprint.

Cite this