Macroeconomic evidence on the impact of mandatory IFRS adoption on equity and debt markets Messod D. Beneish ⇑ , Brian P. Miller, Teri Lombardi Yohn Department of Accounting, Kelley School of Business, Indiana University, Bloomington, IN, United States abstract This study investigates whether mandatory IFRS adoption is asso- ciated with increased foreign portfolio investment into the adopt- ing country’s debt and equity markets. Using macroeconomic data and a pre–post design centered in 2005, we find that IFRS adoption has a significantly greater effect on foreign debt than on foreign equity investment flows. This result is consistent with the notion that debt investors are greater consumers of financial statement information. We find that the increase in foreign equity investment around IFRS adoption is limited to countries that had higher gover- nance quality, economic development, and creditor rights prior to adoption. In contrast, the increase in foreign debt investment around IFRS adoption is significant for all adopting countries inde- pendent of these characteristics. Finally, we find that the increase in foreign equity investment derives primarily from the U.S., whereas the increase in foreign debt investment derives from the U.S. and other non-adopting countries. The evidence that increases in foreign investment originate from non-adopting countries rather than other adopting countries suggests that the benefits from mandatory IFRS adoption more likely reflect improved finan- cial reporting quality rather than greater financial statement comparability. Ó 2014 Published by Elsevier Inc. http://dx.doi.org/10.1016/j.jaccpubpol.2014.10.002 0278-4254/Ó 2014 Published by Elsevier Inc. ⇑ Corresponding author. Tel.: +1 (812) 855 2628; fax: +1 (812) 855 4985. E-mail address: dbeneish@indiana.edu (M.D. Beneish). J. Account. Public Policy xxx (2014) xxx–xxx Contents lists available at ScienceDirect J. Account. Public Policy journal homepage: www.elsevier.com/locate/jaccpubpol Please cite this article in press as: Beneish, M.D., et al. Macroeconomic evidence on the impact of mandatory IFRS adoption on equity and debt markets. J. Account. Public Policy (2014), http://dx.doi.org/10.1016/ j.jaccpubpol.2014.10.002