earticle

영어

We analyzed the effects of increases of accounting comparability on foreign equity investment after mandatory adoption of K-IFRS. We also examined changes in foreign investments in the domestic securities market. The De Franco et al.(2011) model was used to measure the comparability. Analyses of the compatibility were made separately on both the amount of shares and the ratio of foreign investment. We examined corporations who have recently adopted K-IFRS, and analyzed separately from the corporations which have already been using K-IFRS since 2009. Result shows that adopting K-IFRS increase corporations’ accounting comparability, and this increase induced a positive effect on foreign investments. In fact during the 6-year survey period accounting comparability and foreign investment were at the peak in 2009, and this clearly shows a correlation between K-IFRS and the increase of accounting comparability. This result supports our hypothesis and leads to a conclusion that objective of K-IFRS implementation in Korea has been achieved. Accounting comparability has increased, which in turn attracted foreign investment. Two things should be noteworthy of interpretation of results. First, it has been only 3 years after the implementation of K-IFRS, and therefore the number of research sample was not sufficient. Second, the model we utilized can have a fundamental limitation. As De Franco et al.(2011) themselves mentioned, use of a simple comparison between profits as a measurement of comparability is questionable. Nevertheless DeFond et al.(2011) claim that this same model is reliable for interpretation of financial analysis.