Convergence of Accounting Standards and Foreign Direct Investment

Jieping Chen (First Author), Yuan Ding (Participant Author), Bin Xu (Participant Author)

Research output: Contribution to journalJournal


Since the development of the eclectic paradigm by Dunning (1977, 1988, 1993), many studies have investigated different forms of location advantages that attract foreign direct investment (FDI). In this study, we consider accounting standards as a component of the institutional infrastructure of a location and hypothesize that the convergence of domestic and International Financial Reporting Standards (IFRS) promotes FDI as it reduces information processing costs for foreign investors.2 We also hypothesize that the effect of reduced information costs is stronger for partner countries whose accounting systems showed greater pre-convergence differences because they magnify the facilitating role of accounting standard convergence for FDI. Using bilateral FDI data from 30 OECD countries between 2000 and 2005, we find evidence generally consistent with these hypotheses.
Original languageEnglish
Pages (from-to)53-86
JournalInternational Journal of Accounting
Issue number1
Publication statusPublished - 2014


  • Accounting harmonization
  • Foreign direct investment
  • IFRS
  • Location
  • OECD

Indexed by

  • ABDC-A
  • Scopus


Dive into the research topics of 'Convergence of Accounting Standards and Foreign Direct Investment'. Together they form a unique fingerprint.

Cite this