This paper examines whether the adoption of International Accounting Standards (IAS) is associated with predictable differences in accounting quality and cost of capital. The study compares firms that adopt IAS with a matched sample of firms that do not. After IAS adoption, firms show less earnings management, more timely loss recognition, and higher value relevance of accounting data than non-adopting firms. IAS-adopting firms also exhibit higher accounting quality after adoption, suggesting that IAS adoption improves accounting quality. While the results are somewhat speculative, they provide weak evidence that IAS-adopting firms may have a lower cost of capital after adoption than non-adopting firms. The study finds that IAS-adopting firms have significantly higher variance in the change in net income, a higher ratio of the variances of the change in net income and change in cash flows, and a lower frequency of small positive net income. They also have a higher frequency of large negative net income and higher value relevance of accounting amounts. Pre-adoption differences between IAS-adopting and non-adopting firms do not explain the post-adoption differences in earnings quality. Prior to adopting IAS, firms either insignificantly differ from non-adopting firms or have metrics consistent with lower accounting quality. The study also provides preliminary evidence on the effects of using IAS on firms' cost of equity capital. The results suggest that IAS-adopting firms may have a lower cost of capital than non-adopting firms. The study uses the three-factor model of Fama and French (1993) to estimate equity cost of capital. The findings indicate that IAS adoption is associated with a reduction in cost of capital. Overall, the results suggest that IAS adoption improves accounting quality and reduces the cost of capital. The findings are consistent across cross-sectional and time-series analyses, suggesting that the changes occur in conjunction with IAS adoption. The study concludes that IAS adoption appears to improve financial reporting, and that the results are encouraging in suggesting that IAS could continue to improve financial reporting going forward.This paper examines whether the adoption of International Accounting Standards (IAS) is associated with predictable differences in accounting quality and cost of capital. The study compares firms that adopt IAS with a matched sample of firms that do not. After IAS adoption, firms show less earnings management, more timely loss recognition, and higher value relevance of accounting data than non-adopting firms. IAS-adopting firms also exhibit higher accounting quality after adoption, suggesting that IAS adoption improves accounting quality. While the results are somewhat speculative, they provide weak evidence that IAS-adopting firms may have a lower cost of capital after adoption than non-adopting firms. The study finds that IAS-adopting firms have significantly higher variance in the change in net income, a higher ratio of the variances of the change in net income and change in cash flows, and a lower frequency of small positive net income. They also have a higher frequency of large negative net income and higher value relevance of accounting amounts. Pre-adoption differences between IAS-adopting and non-adopting firms do not explain the post-adoption differences in earnings quality. Prior to adopting IAS, firms either insignificantly differ from non-adopting firms or have metrics consistent with lower accounting quality. The study also provides preliminary evidence on the effects of using IAS on firms' cost of equity capital. The results suggest that IAS-adopting firms may have a lower cost of capital than non-adopting firms. The study uses the three-factor model of Fama and French (1993) to estimate equity cost of capital. The findings indicate that IAS adoption is associated with a reduction in cost of capital. Overall, the results suggest that IAS adoption improves accounting quality and reduces the cost of capital. The findings are consistent across cross-sectional and time-series analyses, suggesting that the changes occur in conjunction with IAS adoption. The study concludes that IAS adoption appears to improve financial reporting, and that the results are encouraging in suggesting that IAS could continue to improve financial reporting going forward.