Do IFRS Based Earnings Announcements Have More Information Content than Canadian GAAP Based Earnings Announcements?

Khan, Shahid; Anderson, Mark C.; Warsame, Hussein A.

doi:10.2139/ssrn.2379921

Cited by 7 publications

(18 citation statements)

References 47 publications

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“…When the extractive industry firms are analyzed in a subsample, there is a significant increase in the level of accruals‐based earnings management. Using an event study methodology to examine the information content of earnings pre‐ and post‐IFRS adoption in Canada, Khan, Anderson, Warsame, and Wright () find a greater divergence of opinions resulting from earnings announcements post‐IFRS adoption, which indicates a higher level of value relevance post‐IFRS. While the majority of the above studies indicate we should expect an increase in the value relevance of earnings, the results pertaining to the impact on book value are less clear.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Value Relevance of Environmental Provisions Pre‐ and Post‐IFRS

Wegener

Labelle

2017

Accounting Perspectives

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The purpose of this paper is to compare the value relevance of environmental provisions as recorded under Canadian/U.S. GAAP and IFRS accounting frameworks with consideration of the impact of voluntarily issuing stand‐alone sustainability reports. The value relevance of environmental provisions is tested using a modified Ohlson (1995) model. We exploit IFRS reconciliations as a quasi‐experimental setting to conduct this comparison. Results indicate that environmental provisions recorded under either framework only act as liabilities for oil and gas firms that release stand‐alone sustainability reports. For other firms in the oil and gas industry, and the mining industry, the liability nature of these provisions appears to be discounted by the market. Furthermore, for firms in the oil and gas industry that do not have stand‐alone CSR reports, provisions appear to be interpreted by the market as a costly signal about future growth. Instead of downwardly affecting market values, this information is associated with higher market values. In terms of the transition to IFRS, we find that, while the IFRS provisions are significantly higher than under former GAAP, they do not improve value relevance for investors. Accounting standard setters should consider examining the changes in the current standards from the original Canadian environmental provision reporting requirements under Capital Assets section 3060.39, as it was rightfully shown to be a relevant proxy for unbooked liabilities (Li and McConomy, 1999; Bewley, 2005) rather than earnings expectancy. The study builds upon prior research to examine the value of accounting standards that have gone through significant changes.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Value Relevance of Environmental Provisions Pre‐ and Post‐IFRS

Wegener

Labelle

2017

Accounting Perspectives

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“…The need for greater accounting information quality and reliability is often referred to by accounting regulators, practitioners and accounting scholars as a reason for IFRS implementation (Ali, 2005;Khan, Anderson, Warsame, & Wright, 2015). Following EU announcement of IFRS adoption, many other countries such as Australia and New Zealand considered IFRS as alternative accounting standards for financial reporting (Zijl & Bradbury, 2006).…”

Section: Introductionmentioning

confidence: 99%

“…The enactment of the SarbanesOxley Act of 2002 in the United States (US) was part of the move towards greater transparency under section 302 (Cook, Huston, & Omer, 2008). Some accounting practitioners are of the views that the move towards greater transparency is an overarching measure of corporate accountability and business sustainability (Khan et al, 2015;Schaltegger & Burritt, 2010).…”

Section: Introductionmentioning

confidence: 99%

The Influence of IFRS Adoption on Corporate Transparency and Accountability: Evidence from New Zealand

Edeigba¹,

Amenkhienan²

2017

AABFJ

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This study investigates the implications of the gap between International Financial Reporting Standards (IFRS) and New Zealand International Financial Reporting Standards (NZIFRS) on financial reporting transparency, accountability and corporate fraud. Content analysis of IFRS and NZIFRS was carried out to determine if there are differences between IFRS and NZIFRS. Four IFRS, namely IAS 12, IFRS 13, IFRS 15, IAS 17 and IFRS 16 were analysed on the basis of adoption concessions and Reduced Disclosure Regime (RDR) for tier 1 and 2 entities. The findings from these standards led to a review of the associated IFRS to further understand the implications of the standards on financial reporting transparency and decline in incidences of corporate fraud. We found that the difference between IFRS and NZIFRS lies in the financial reporting framework for tier 2 entities. However, we did not find a difference between IFRS and NZIFRS for entities in tier 1 but we identified a decline in incidences of corporate fraud after IFRS was adopted. We further identified the presence of information asymmetry for tier 2 which is capable of retaining Generally Accepted Accounting Principles (GAAPs). These differences may increase the incidence of corporate fraud among the entities in tier 2 of External Reporting Framework. This is due to an excessive concession from IFRS implementation in New Zealand. were analysed on the basis of adoption concessions and Reduced Disclosure Regime (RDR) for tier 1 and 2 entities. The findings from these standards led to a review of the associated IFRS to further understand the implications of the standards on financial reporting transparency and decline in incidences of corporate fraud. We found that the difference between IFRS and NZIFRS lies in the financial reporting framework for tier 2 entities. However, we did not find a difference between IFRS and NZIFRS for entities in tier 1 but we identified a decline in incidences of corporate fraud after IFRS was adopted. We further identified the presence of information asymmetry for tier 2 which is capable of retaining Generally Accepted Accounting Principles (GAAPs). These differences may increase the incidence of corporate fraud among the entities in tier 2 of External Reporting Framework. This is due to an excessive concession from IFRS implementation in New Zealand.JEL Classification: G34, G38, M48

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“…Numerous studies have examined the impact of IFRS adoption on firm financial disclosure, both mandatory and voluntary (Cormier, 2013;Barbu, et al, 2011;Demolli and Dufour, 2007;Gabteni, 2011;De La Bruslerie and Gabteni, 2011;Iatridis, 2012;Glaum, et al, 2013;Miihkinen, 2008;Nordlund, 2010;Tsalavoutas, 2011;Viana, 2008;Warwick Stent and Hooks, 2013;Pfeffer et al, 2012;Blanchette et al, 2013;Khan et al, 2014;Gibson, 2014 ;Liu and Sun, 2015;Thornton, 2015). Most of this research was conducted in the European context and led to the conclusion that firm financial disclosures have improved with the implementation of IFRS in adopting countries.…”

Section: Literature Review and Hypothesismentioning

confidence: 99%

“…Some of these investigations analyzed the quality and properties of financial information in Canada under IFRS (Cormier, 2013;Liu and Sun, 2015), while others compared ratios and numbers between the pre-IFRS and IFRS periods (Blanchette et al, 2013;Khan et al, 2014). Other researchers addressed the subject in regard to a specific industry, as Gibson (2014) did in her article investigating the impact of IFRS conversion on Canadian public banking enterprises.…”

Section: Literature Review and Hypothesismentioning

confidence: 99%

The Impact of IFRS Adoption on Canadian Firms’ Disclosure Levels

Mahjoub

Dicko

2017

ijafr

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This study examines a random sample of Canadian firms listed on the S&P/TSX Composite Index to find out whether disclosures in IFRS financial statements increased compared to disclosures based on the former Canadian generally accepted accounting principles. Results show that IFRS adoption has had a positive impact on the amount of information disclosed in financial statements. We conclude that disclosure levels in financial statements based on IFRS are much higher than formerly under Canadian GAAP.

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Do IFRS Based Earnings Announcements Have More Information Content than Canadian GAAP Based Earnings Announcements?

Cited by 7 publications

References 47 publications

Value Relevance of Environmental Provisions Pre‐ and Post‐IFRS

Value Relevance of Environmental Provisions Pre‐ and Post‐IFRS

The Influence of IFRS Adoption on Corporate Transparency and Accountability: Evidence from New Zealand

The Impact of IFRS Adoption on Canadian Firms’ Disclosure Levels

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