Abstract:
Previous literature suggests that the adoption of International Financial
Reporting Standards (IFRS) can facilitate cross-border capital flows, as it
results in an increase in market liquidity and comparability benefits. Using
foreign ownership levels in South African listed companies during the
period 2003 to 2007, we test whether this association holds in a South
African context when the top 40 South African companies mandatorily
adopted IFRS. The results indicate that the adoption of IFRS did not have
a significant positive association with foreign ownership levels during
the sample period. We attribute the result to the harmonisation project
undertaken in South Africa to align local accounting standards (SAGAAP)
with the IFRS before the mandatory adoption thereof.
