IFRS convergence and international trade: evidence from China

Using a comprehensive dataset of firm-level export transactions from China Customs, this paper investigates whether mandatory International Financial Reporting Standards (IFRS) convergence promotes Chinese firms’ export activities. We find that compared with private firms which were not immediately required to comply with the new accounting standards in 2007, listed firms experienced a significant increase in their exports after converging with IFRS. The positive effect of IFRS convergence on exports only occurred when firms traded with IFRS countries and when they were non-state-owned enterprises. The findings are robust to a battery of sensitivity tests. We contribute to the literature on the real economic effects of IFRS harmonisation by documenting its role in enhancing international trade and global product market integration.