Frankie Chau
Lecturer, Durham Business School, UK.
Galiya Dosmukhambetova
High School of Economics and Business, Al-Farabi Kazakh National
University, Kazakhstan.
Vasileios Kallinterakis
Durham Business School, UK.The Impact of Mandatory IFRS Adoption on Noise
Trading: Evidence from Central and Eastern
European Countries
This paper examines whether the mandatory adoption of
International Financial Reporting Standards (IFRS) in 2005 has
produced an impact on the level of noise trading in Central and Eastern
European (CEE) markets. Our results show that noise trading was
mostly significant prior to the IFRS introduction, with its significance
dissipating following the implementation. These findings are consistent
with the notion that IFRS adoption has the potential to enhance the
stability and informational efficiency of capital markets by promoting
information-based trading and reducing the impact of noise traders.
Overall, our results yield important insight into the impact of IFRS
adoption on the overall market quality and investors’ behaviour and
bear important implications for finance practitioners and market
regulators alike.