The Impact of Accounting Standards Convergence on Cross-Border Investment Decisions

Abstract

This study analyzes the impact of accounting standards convergence on cross-border investment decisions. The research reviews the theoretical foundations of accounting standards convergence, including information economics, agency theory, and institutional theory. Through systematic analysis, the study constructs a theoretical framework for how accounting standards convergence influences cross-border investment decisions. The research finds that accounting standards convergence may affect cross-border investment decisions through multiple theoretical mechanisms: based on information asymmetry theory, standards convergence can reduce information disparities between investors and investee companies, facilitating investment decisions; according to transaction cost theory, standards convergence lowers information processing costs for financial statement users, benefiting cross-border investment; from an institutional theory perspective, standards convergence provides a unified institutional environment for cross-border investment, reducing uncertainty caused by institutional differences. The study also points out the complexities of the impact of standards convergence on cross-border investment, such as differences in standards implementation quality and cultural influences. To address these complexities, the study proposes a multi-level analytical framework that considers country characteristics and institutional environments. The research also explores the interaction between standards convergence and other economic factors (such as corporate governance and legal systems), providing directions for future research.