Analyzing the Impact of International Financial Reporting Standards Adoption on Investor Confidence Levels

Posted: Aug 12, 2021

• Ella Robinson
• Emily Brown
• Emily Clark

Abstract

The global convergence toward International Financial Reporting Standards represents one of the most significant developments in financial reporting history, with profound implications for capital markets, corporate transparency, and investor decision-making processes. While extensive literature has examined the economic consequences of IFRS adoption, the specific mechanisms through which these standards influence investor confidence remain inadequately understood through conventional analytical frameworks. Traditional approaches have predominantly relied on event studies and regression analyses of market-based metrics, which while valuable, fail to capture the multidimensional nature of investor confidence formation in the context of complex regulatory transitions. This research introduces an innovative computational framework that bridges accounting research with computational social science, offering a more nuanced understanding of how IFRS adoption shapes investor perceptions and behaviors. Our approach recognizes that investor confidence is not merely a function of accounting quality metrics but emerges from complex interactions between regulatory changes, corporate communication strategies, institutional environments, and individual cognitive processes. By developing a methodology that integrates natural language processing, machine learning classification, and behavioral modeling, we address fundamental gaps in understanding how standardized reporting frameworks actually influence the psychological underpinnings of investment decisions across different market contexts.