Adoption of International Financial Reporting Standards: Impact on the Value Relevance of Intangible Assets

Chalmers, Keryn; Clinch, Greg; Godfrey, Jayne M.

doi:10.1111/j.1835-2561.2008.0028.x

Cited by 100 publications

(123 citation statements)

References 20 publications

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“…This is in harmony with the results of Bartov et al (2005), Hung and Subramanyam (2007), Barth et al (2008), Chalmers et al (2008), Curto (2009), Chalmers et al (2009), Kadri et al (2009) and Lima (2011), who also found an improvement in the information content of the financial statements after the process of convergence to international accounting standards.…”

Section: Table 4 Results Of the Regression With Seps And Wcpssupporting

confidence: 66%

“…In this area, the work of Bartov, Goldberg, and Kim (2005) Chalmers, Clinch, and Godfrey (2008), Curto (2009), Chalmers, Clinch, andGodfrey (2009), Kadri, Aziz, and Ibrahim (2009) and Lima (2011) showed gains in the relevance of accounting information when there was a migration from a local standard to the international standard. In the contrary sense, the work of Niskaen, Kinnunen, and Kasanen (2000), Van der Meulen, Gaeremynck, and Willekens (2007) and Morais and Curto (2008) showed that changes resulting from the process of accounting harmonization with IFRS did not give rise to any gains in relevance, or that any such changes were not significant.…”

Section: Value Relevance: the Study Of The Relevance Of Accounting Inmentioning

confidence: 99%

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Analysis of the Relevance of Information Content of the Value Added Statement in the Brazilian Capital Markets

Machado

Macedo

Machado

2015

Rev. contab. finanç.

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The usefulness of financial statements depends, fundamentally, on the degree of relevance of the information they disclose to users. Thus, studies that measure the relevance of accounting information to the users of financial statements are of some importance. One line of research within this subject is in ascertaining the relevance and importance of accounting information for the capital markets: if a particular item of accounting information is minimally reflected in the price of a share, it is because this information has relevance, at least at a certain level of significance, for investors and analysts of the capital markets. This present study aims to analyze the relevance, in the Brazilian capital markets, of the information content of the Value Added Statement (or VAS) -referred to in Brazil as the Demonstração do Valor Adicionado, or DVA. It analyzed the ratio between stock price and Wealth created per share (WCPS), using linear regressions, for the period 2005-2011, for non-financial listed companies included in Melhores & Maiores ('Biggest & Best'), an annual listing published by Exame Magazine in Brazil. As a secondary objective, this article seeks to establish whether WCPS represents a better indication of a company's result than Net profit per share (in this study, referred to as NPPS). The empirical evidence that was found supports the concept that the VAS has relevant information content, because it shows a capacity to explain a variation in the share price of the companies studied. Additionally, the relationship between WCPS and the stock price was shown to be significant, even after the inclusion of the control variables Stockholders' equity per share (which we abbreviate in this study to SEPS) and NPPS. Finally, the evidence found indicates that the market reacts more to WCPS (Wealth created per share) than to NPPS. Thus, the results obtained give some indication that, for the Brazilian capital markets, WCPS may be a better proxy concept for referring to a company's result than NPPS.

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Section: Table 4 Results Of the Regression With Seps And Wcpssupporting

confidence: 66%

Section: Value Relevance: the Study Of The Relevance Of Accounting Inmentioning

confidence: 99%

Analysis of the Relevance of Information Content of the Value Added Statement in the Brazilian Capital Markets

Machado

Macedo

Machado

2015

Rev. contab. finanç.

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show abstract

“…They argue that the change in the accounting system potentially reduce earnings manipulation practices due to more restrictive requirements, thus leading to the recognised amounts of these expenditures being regarded by the investors as having future economic benefits. Meanwhile, [13] examine the effect of IFRS adoption on the value relevance of intangible assets in Australia. Based on a sample of 599 ASX firms listed in 2006, they compare the Australian GAAP and IFRS balances for goodwill and identifiable intangible assets reported in the annual reports.…”

Section: B Accounting For Intangible Assets Value Relevance and Firmentioning

confidence: 99%

Firm Life Cycle and the Value Relevance of Intangible Assets: The Impact of FRS 138 Adoption

Jaafar¹,

Halim²

2013

IJTEF

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Section: Introductionmentioning

confidence: 99%

“…AASB 138 "Intangibles" is an Australian equivalent of International Financial Reporting Standard (AIFRS). Adoption of AIFRS significantly changed the measurement and recognition practices for goodwill in Australia (Chalmers, Clinch, & Godfrey, 2008).Market capitalization of listed firms as measured by quoted share prices is generally higher than the book value of the net assets of listed firms. For many firms, the difference between these two measures is significant.…”

mentioning

confidence: 99%

Analysis of Hidden Value and Value Relevance of Financial Statements Pre- and Post-IFRS Adoption

Garg¹

2017

JMAA

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This study analyses the hidden value and value relevance of financial statements pre-and post-IFRS (International Financial Reporting Standards) adoption. Prior studies on IFRS adoption provide conflicting evidence on value relevance. Market-to-book ratio and IFRS adoption value relevance using price is examined for Australian listed firms. Results show that IFRS adoption is value relevant over a longer period of time. Results are opposite for profit-making firms compared to loss-making firms which may explain the conflicting results. In the presence of goodwill, IFRS is not value relevant when post-global financial crisis (GFC) period is included. Market-to-book ratio has increased in the post-IFRS period lowering the usefulness of financial statements. Moreover, results show that macro-economic changes affecting valuation of firms may explain for differences in the results for market-to-book ratio and value relevance in different jurisdictions and time periods. Keywords: goodwill, hidden value, International Financial Reporting Standards (IFRS), impairment, value relevance IntroductionSeveral studies around the world have examined the benefits of International Financial Reporting Standards (IFRS) adoption. But the results from these studies provide conflicting evidence. This makes it difficult to draw definitive conclusions about the benefits of IFRS adoption. Different regimes have used varying approaches on goodwill recognition prior to IFRS adoption. Therefore, while IFRS adoption had a uniform impact on the way goodwill is reported and impaired, in the pre-IFRS regime, there are differences across jurisdictions that adopted IFRS.In Australia, a key difference in IFRS is the impairment of goodwill as opposed to systematic amortization as in previous years. This study tries to examine the reason behind the inconclusive results using goodwill and segregation of firms based on profitability as key accounting items. The value relevance of IFRS is analysed over a longer period of time. Moreover, the study examines the usefulness of financial statements pre-and post-IFRS adoption and explores whether the usefulness has increased or decreased over a longer period of time.Market-to-book ratio of the Standard & Poor's 500 over the past two decades rose from just over one in the early eighties to a peak of six by 2000, falling back to 4.5 by late (Beattie & Thomson, 2005. Such large changes in the difference between market value of equity and book value of equity suggest over the last 20 years that the usefulness of financial accounting has reduced significantly. Lev (2002) suggested that the difficulty of valuing firms that deal with concepts, rather than tangible assets and growing size makes an Mukesh Garg, Lecturer, Department of Accounting, Monash University. Email: mukesh.garg@monash.edu. economy more susceptible to Enron type collapses. Lev and Zarowin (1999) provided evidence which indicates that the usefulness of reported earnings, cash flows, and book (equity) values has been deteriorating over the past two...

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Adoption of International Financial Reporting Standards: Impact on the Value Relevance of Intangible Assets

Cited by 100 publications

References 20 publications

Analysis of the Relevance of Information Content of the Value Added Statement in the Brazilian Capital Markets

Analysis of the Relevance of Information Content of the Value Added Statement in the Brazilian Capital Markets

Firm Life Cycle and the Value Relevance of Intangible Assets: The Impact of FRS 138 Adoption

Analysis of Hidden Value and Value Relevance of Financial Statements Pre- and Post-IFRS Adoption

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