Stock price reaction to adoption of international financial reporting standards in Russia

Abstract

The goal of this master thesis is to assess the market perception of mandatory IFRS adoption for listed companies on the basis of historical stock market prices.

The thesis pursues the following objectives: 1) to determine the price reaction of companies exposed to mandatory IFRS adoption, to events increasing probability of IFRS adoption for listed companies 2) to identify types of companies which were most or least sensitive to events increasing probability of mandatory IFRS adoption listed companies. Main results Event study and difference-in-differences methods applied in the study demonstrated that companies exposed to mandatory IFRS adoption reacted negatively to events which increased the probability of mandatory IFRS adoption for them. Significant price reaction was detected only on the day of final decision on IFRS adoption by listed companies. The exception were oil and gas extraction companies which reacted to the event less negatively.