The impact of national culture on the synchronicity of cross-listed firms

We examine the impact of national culture on the relationship between International Financial Reporting Standards (IFRS) adoption and stock price synchronicity for a sample of cross-listed firms in the U.S. We find that synchronicity decreases when the cross-listed firms reconcile their accounts from IFRS to U.S. GAAP. The synchronicity reduction is more pronounced for firms from secretive societies (i.e., low individualistic and masculine cultures, and high uncertainty avoidance and power distance cultures). Our results reveal that IFRS adoption improves firm-specific information, and national culture affects such improvement.

Automated summary

This study examines the impact of national culture on the relationship between the adoption of International Financial Reporting Standards (IFRS) and stock price synchronicity for cross-listed firms in the U.S. The results show that synchronicity decreases when firms reconcile their accounts from IFRS to U.S. GAAP, and the reduction is more notable for firms from secretive societies. The findings suggest that IFRS adoption enhances firm-specific information, and this improvement is influenced by national culture.