This study investigates whether there is evidence that the letter issued and disclosed to the market by the international accounting standardsetter the International Accounting Standards Board (IASB), which warned of an inadequate accounting for, had informational content and caused changes in the stock prices of banks in Germany, Spain, France, Italy and the United Kingdom whose portfolios included Greek bonds. This analysis is important because the letter represents the first time that the IASB took a stand on the adequacy of published financial statements compared to international accounting standards (International Financial Reporting Standards, or IFRS). To perform this analysis, the event date was identified as the day on which the letter was publicly disclosed by the specialized press. Although the letter was published on August 30, 2011, it was dated August 4, 2011, and according to the IASB, it was disclosed on August 30 because the day before, the Financial Times reported concerns by the IASB regarding accounting inadequacies that were occurring in the market. To assess the impact of the event, the market-adjusted return metric was used, and using the difference-in-differences approach, it was possible to test the effect of the interaction on the treatment group (i.e., banks that owned Greek bonds) during the time after the letter was published. For this test, a regression was performed for each event window using the Ordinary Least Squares method (OLS) with pooled data. The results show there is evidence that the standard-setter's opinion is relevant, i.e., that the IASB's letter had an impact on the stock return of banks that owned Greek bonds during the period of analysis.
Event study; standard-setting body; financial instrument accounting; financial crisis
