Analysis of Mutual Fund Own Article

Summary

Our group is assigned to two articles which titles are, "The Impact of Mandatory IFRS Adoption on Foreign Mutual Fund Ownership: The role of Comparability" (1105) and "IFRS: What Are The Benefits?" (1110).

In the article 1105, the research objective is to examine whether the EU's mandatory adoption of IFRS in 2005 results in improved comparability that leads to increased investment by foreign mutual funds. In the article 1110, the research objectives are to assess the extent of benefits of adopting international financial reporting standards (IFRS) in lieu of a country's domestic standards besides to expand the range of possible benefits that are investigated, and improve the methods used to seek them out. The second article discusses the benefits of IFRS in more general scope but the first article narrows down into foreign mutual funds only.

According to the objective, the research question for the first article is, "What is the change in foreign mutual fund investment in firms following mandatory IFRS adoption in the European Union in 2005?" On the other hand, there are five research questions for the second article. They are, "What is the role of financial accounting standards?", "When countries have adopted IFRS in particular, what benefits have they sought?", "What has been their experience?", "What are needs to be in place to gain the greatest benefits from IFRS?" and "What does the future hold?"

Article 1105 uses quantitative method and archival data as research approach while article 1110 uses qualitative method, archival data and literature as research approach. The research sample for the first article focuses in the European Union (EU) only which comprises of 1,365 unique firms with 5,460 firm-years of mandatory IFRS adopters but the sample for second article involves the whole world.

The main hypothesis for article 1105 is that firms experience larger increases in foreign mutual fund ownership when there is a credible increase in uniformity from IFRS adoption. The dependant variable is foreign mutual fund ownership. Independent variables are post adoption, strong implementation credibility and large increase in uniformity. Control variable is country-level (EU). Hence, the regression model used to test the hypothesis is as follow:

Foreign mutual fund ownership = β0 + β1(post) + β2(strong credibility) + β3(post x Strong credibility) + β4(large increase in uniformity) + β5(Post x large increase in uniformity) + β6(Strong credibility x large increase in uniformity) + β7(post x strong credibility x large increase in uniformity) + βj(controlsj)

However, research hypothesis and research variable are not applicable in the article 1110 because it uses qualitative approach in the research.

As a result, article 1105 finds