| Summary: | This study aims to provide empirical evidence related to the influence of
mandatory IFRS adoption on the information quality and information asymmetry.
This study is an extension of the study Armstrong at al. (2010) about the positive
reaction to the mandatory IFRS adoption process in the European Market
associated with the perception that IFRS will improve the information quality and
reduces information asymmetry.
By using secondary data as many as 426 manufacturing firms obtained from the
OSIRIS database includes data published financial statements and stock prices,
this study compared the information quality and information asymmetry between
prior period (2002-2004) and period after the IFRS adoption.
The results provide that an increase in the information quality after the mandatory
IFRS adoption in the EU. However, improving the information quality is not
followed by a decrease in information asymmetry such as Ball�s (2006) opinion,
and the results of this study showed that an increase in information asymmetry
after mandatory IFRS adoption in the EU. As Hung and Subramanyam (2007)
states that the accounting standards is not a major factor that can affect the quality
of accounting information.
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