Changes in the value relevance of accounting information before and after the adoption of K-IFRS: evidence from Korea

Kwon, Gee Jung

doi:10.1504/aajfa.2018.089209

Cited by 8 publications

(5 citation statements)

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“…(Paglietti, 2009) conducted comparative research on the value relevance in Italy pre and post-IFRS mandatory enforcement and indicated that value relevance increases after IFRS mandatory enforcements (Vijitha and Nimalathasan, 2014) suggested in their finding that accounting information substantially affects the script prices of manufacturing sector. Similar research conducted by (Kwon, 2018) to assess the value relevance regarding IFRS mandatory enforcement in Korea and witnessed a substantial change in the earnings and book value's relevance. Similarly, many other researchers in China reported a significant increase in value relevance during post-IFRS enforcement (Sami and Zhou, 2004;Bingbin et al, 2015) and consistent findings were suggested by (Azeem and Kouser, 2011) in Pakistan and (Kristanto, 2015) in Indonesia.…”

Section: Related Literature and Research Hypothesismentioning

confidence: 92%

Value relevance of earnings and book values during IFRS convergence period in India

Srivastava

Muharam

2021

JFRA

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Purpose The authors aim to examine the association between earnings and book values with stock prices in India during the IFRS convergence period because, in India, the literature is yet to investigate more about IFRS convergence and its impact on the financial reporting environment. Hence, the purpose of this study is to assess the influence of IFRS conversion on the value relevance of accounting information throughout the IFRS conversion period. Design/methodology/approach The current paper endeavors to investigate the earnings and book values affiliation with stock prices in India during the IFRS convergence period by employing a price valuation model (Ohlson’s Model). The study assembled a total of 3,440 firm-year observations from the National Stock Exchange in India over five years, which signifies the IFRS conversion period (2015–2019). Findings The research findings displayed that accounting information such as earnings, book value has value relevance throughout the IFRS enforcement period; however, the value relevance has been increasing for earnings and showing a descending association for book value. The significant explanatory power of earnings reveals that market participants give more weightage to earnings than book values. Overall, the findings of the study will facilitate improved decision making for both, capital market participants and regulators, by highlighting the key areas for improvement in the Indian capital market. Research limitations/implications This study also extends a discussion on the subject in those economies where regulations are weak and the market is imperfect with asymmetrical information. Practical implications The research outcome provides for empirical shreds of evidence regarding the value relevance of accounting information during IFRS enforcement in India, where IFRS is a recent emergence. Social implications This paper examines the value relevance of accounting information during IFRS convergence period in India which will felicitate improved decision making for both, market regulators and investors. Originality/value This research is the first factual documentation regarding value relevance of earnings and book value during the IFRS enforcement process in India with the most recent data and contributes to the limited study conducted in developing nations like India.

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Section: Related Literature and Research Hypothesismentioning

confidence: 92%

Value relevance of earnings and book values during IFRS convergence period in India

Srivastava

Muharam

2021

JFRA

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“…In contrast, their findings suggest decreases or large oscillations in the value relevance for the observed period. Kwon (2018) explored the value relevance change before and after the mandatory adoption of Korea's international financial reporting standards and observed a significant change in the value relevance of earnings and book value produced by Korean-listed companies. Although these studies measure the value relevance of financial statements differently, all find that it has decreased in the past few decades (Givoly et al, 2013).…”

Section: Introductionmentioning

confidence: 99%

Value relevance of earnings and book values in the Qatari Stock Exchange

Almujamed

Alfraih

2019

EMJB

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Purpose The study of developed capital markets suggests that information provided in financial statements has lost its value relevance to equity holders. The purpose of this paper is to explore this issue in the emerging market of Qatar. Design/methodology/approach Following other studies in the literature, the study examines the value relevance of earnings and book values using the price valuation model provided by Ohlson (1995). A total of 215 observations were collected from all firms listed on the Qatari Stock Exchange over a period of five years (2012–2016). Findings This study suggests that the value relevance of both earnings and book values has noticeably decreased over the sample period. However, its results show that the decline in the value relevance of earnings favored book values. Research limitations/implications Like other studies, this one has limitations that suggest areas for future research. For example, in Qatar, like other emerging markets, a lack of data prevents the performance of deep analysis. Additionally, the authors only use Ohlson’s (1995) model as a framework for evaluation. It would be interesting to explore the changes when examining alternative valuation models. Another limitation is that the authors examine only two accounting measures: earnings and book values. Further research could explore changes in the value relevance of other measures, such as cash flow. Practical implications These findings provide empirical evidence regarding the value relevance of earnings and book values in an emerging market. Originality/value To the authors’ knowledge, this paper provides the first empirical evidence regarding the value relevance of earnings and book values in the emerging capital market of Qatar.

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“…On the other hand, Park (2016) found increase of value relevance for long time periods after IFRS adoption and decrease of value relevance for short time research periods. Kwon (2018) showed negatives association between stock price and accounting performances such as net income, operating income, (operating) cash flows, which were unique results in value relevance-related researches. Furthermore, it seems that Kwon (2018) didn't considered the fact that the main financial statements of Korean firms were changed from individual financial statements to consolidated financial statements after IFRS adoption 3 .…”

Section: Introductionmentioning

confidence: 81%

The effect of IFRS adoption on the value relevance of accounting information: evidence from South Korea

Leem

Yuk

2019

Investment Management and Financial Innovations

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This study investigates whether the value relevance of accounting information was changed after IFRS adoption in South Korea. Related prior studies have found mixed empirical evidence depending on research methodologies or research periods. Moreover, the effect of IFRS adoption on value relevance can be different between Korean stock markets (KSE and KOSDAQ) because they have different characteristics. Also, the main financial statements reported by Korean firms had changed from individual financial statements to consolidated financial statements after IFRS adoption. Thus, this study analyzes the effect of IFRS adoption on the value relevance of individual and consolidated accounting numbers expanding research periods (5 years before and after IFRS adoption) and comparing changes in explanatory powers of Ohlson (1995) model on each listing market. The empirical results indicate that the value relevance of Korean listed firms generally decreased after IFRS adoption. However, the value relevance of KSE listed firms decreased, while the value relevance of KOSDAQ listed firms increased after IFRS adoption. In addition, it was found that the effects of IFRS adoption on value relevance of individual and consolidated financial information were different depending on listed markets. This implies that different level of demand for information environment may induce differential effects of IFRS adoption on value relevance.

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Changes in the value relevance of accounting information before and after the adoption of K-IFRS: evidence from Korea

Cited by 8 publications

References 0 publications

Value relevance of earnings and book values during IFRS convergence period in India

Value relevance of earnings and book values during IFRS convergence period in India

Value relevance of earnings and book values in the Qatari Stock Exchange

The effect of IFRS adoption on the value relevance of accounting information: evidence from South Korea

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