The impact of mandatory IFRS reporting on institutional trading costs: Evidence from Australia

Andrew Lepone*, Jin Boon Wong

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

7 Citations (Scopus)


This study examines the impact of mandatory International Financial Reporting Standards (IFRS) on the market quality of the Australian Securities Exchange (ASX) 200 constituent stocks. Using traditional metrics that are consistent with prior literature (i.e., bid-ask spreads), the first stage analysis confirms that stock liquidity has improved. However, when the analysis is extended to consider the trading costs incurred by market participants (i.e., execution shortfall), results suggest liquidity has not changed significantly. The paper utilizes rich unique datasets that contain detailed trade information, and findings are robust after controlling for trade difficulty and market conditions. In the era of High Frequency Trading (HFT) and occurrences of 'fleeting' liquidity, this paper provides some evidence that while IFRS may have enhanced 'visible' bid-ask spreads, tangible liquidity for market participants, particularly global institutional investors, has not improved significantly.

Original languageEnglish
Pages (from-to)797-817
Number of pages21
JournalJournal of Business Finance & Accounting
Issue number7-8
Publication statusPublished - 2018


  • Accounting standards
  • Australian Securities Exchange
  • Bid-ask spreads
  • Execution shortfall
  • Fleeting liquidity
  • High frequency trading
  • IFRS
  • Institutional investors
  • Liquidity
  • Market quality


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