The Impact of Mandatory IFRS Adoption on International Cross-listings

Using comprehensive international cross-listing data collected from 34 (50) home (target) countries, we examine whether mandatory IFRS adoption facilitates firms' cross-listing activities. Our results show that following mandatory IFRS adoption, firms exhibit significantly higher cross-listing propensity and tend to cross-list their securities in more countries. We also find that cross-listing firms from countries with mandatory IFRS adoption are more likely to cross-list their securities in IFRS-adopting countries and countries with larger and more liquid capital markets following IFRS adoption. Further corroborating our results, we find that IFRS adoption has a greater impact on mandatory IFRS adopters from countries with larger accounting changes, lower disclosure requirement and less access to external capital prior to the IFRS adoption. Collectively, our findings are consistent with the notion that mandatory IFRS adoption facilitates firms' cross-listing activities and highlight the importance to consider the change in firms' cross listing incentives in examining the capital market consequences of mandatory IFRS adoption.