Lakhasly

Recent decades evidenced a significant increase in capital market integrationi across the world, associated with numerous benefits such as better risk sharing, a decrease in the cost of intermediation, efficient resource alloca tion, increased access to the markets, lower cost of capi tal, and higher economic growth (Bekaert et al., 2013; Patel et al., 2022). Countries developed policies to harvest associated benefits like removing capital controls (open ing domestic markets to foreign investors) and signing regional trade agreements to enhance international trade and investment (Lim & Breuer, 2019). However, certain obstructions remain in practice and cause a lower level of capital market integration. For instance, asymmetric financial information in different markets results in a low level of integration because it hinders investors from collecting timely and value relevant information and Can Simga-Mugan is retired from Middle East Technical University. Int J Fin Econ. 2022;1–22. triggers home bias (Bekaert, 1995; Bekaert et al., 2013). Specifically, applying different accounting standards makes financial information hard and costly to process, compare and interpret by global investors. Adopting a single set of financial reporting standards (IFRS) by 144 jurisdictions until 2018 is a great step to remove information frictions and result in more comparable and transparent financial information across countries for global investors (IFRS Foundation, 2018; Zahid & Simga Mugan, 2019). The IFRS Foundation asserts that IFRS Standards bring transparency (through improved compa rability), accountability (by lowering the information dis parity), and efficiency (by facilitating the identification of risks and opportunities, thereby enhancing allocation of capital) to the world's capital markets. Concerning this efficiency purpose, the IFRS Foundation's mission state ment states that “the adoption of a single trusted accounting language lowers the cost of capital and reduces international reporting costs for businesses” (IFRSFoundation, 2021).
Shaping how companies communicate financial performance, Financial
Accounting Standards (FAS) are designed to ensure consistency and transparency in financial statements. To standardize financial reporting, a set of principles and rules is utilized by these standards. The Financial Accounting Standards Board (FASB) and other organizations often set these standards.
Investor decision-making is greatly affected by standardized accounting practices. Such practices permit investors to compare financial data among companies, thereby creating confidence and facilitating informed decisions. The consistent reporting helps investors assess risks, evaluate trends and make measured investment choices. Ultimately, these criteria provide investors with the necessary tools to analyze financial health and performance.