IFRS and value relevance

Abstract

Purpose The purpose of this paper is to compare the value relevance of accounting information between International Financial Reporting Standards (IFRS)-firms and non-IFRS-firms over five years before mandatory IFRS adoption from 2000 to 2004 and six years after IFRS adoption from 2006 to 2011. Design/methodology/approach The sample includes 1166 firm-year observations that cover firms from three Europeans countries. Different econometric tests, multivariate and panel regressions have been used to verify the hypotheses. Findings In the pre-IFRS period, voluntary IFRS adoption did not improve the value relevance of accounting information. The results indicate that the information contents of non-IFRS-firms in the post-adoption period have higher quality than in the pre-adoption period. The findings show a higher association between accounting information, stock prices and stock returns over both periods, however, the difference in results is not statistically significant. Research limitations/implications This study was not generalized to other stock exchanges that have a significant weight in the European Union, such as the FTSE 100 companies or the SP/MIB. Practical implications This study has some implications for standards setters, firms and practitioners. The transition to IFRS reduces the diversity of accounting systems and institutional conditions (capital market structure, Taxation systems). In addition, mandatory IFRS adoption engendered changes in firms’ business and organizational models that led accountants to improve their educational and training programs. Originality/value This paper contributes to the value relevance as well as IFRS literature by using a sample from code-law origin countries that switched from a debt-oriented system to shareholder-oriented system. It offers a comparative approach between IFRS-firms and Non-IFRS-firms in the pre- and post-adoption periods. In contrast, prior studies focused on the comparison during only one period. This empirical evidence should be of interest to investors and policymakers in other markets.

Challenges and Difficulties for Micro-Businesses in Adapting Ifrs for Smes Requirements: Kosovo Evidence

“…The financial crisis of 2007-2009 led a large number of studies to estimate the consequence of financial data value conferring to new standards with the ongoing adoption of the IFRSs towards the converging financial reporting in different states. The vast majority of research refers to forced adaptation (see Roca 2021;Sinem et al 2021;Cormier et al 2009), but there is also research on voluntary adaptation (Kouki 2018). Given the evolution, the research aims to examine the adverse consequences which have a specific focus on micro-businesses when adapting the standards under the present context.…”

The Impact of Corporate Governance on the Cost of Equity for Russian Companies in the Ohlson Model

“…The transfer of companies to IFRS was also of relevance for the authors of the paper describing the markets of France, Belgium and Germany as the most conservative ones from an accounting point of view [35]. The selection was divided into two sub-selections: before and after implementation of IFRS.…”

Apakah konvergensi International Financial Reporting Standards meningkatkan relevansi nilai informasi akuntansi?

“…Penelitian yang telah dilakukan sebelumnya oleh Outa (2011); Karampinis dan Hevas (2011); Cahyonowati dan Ratmono (2012); Zeghal et al (2012); Chua et al (2012); Kargin (2013); Edvandini et al (2014); Kristanto (2015); Wulandari dan Adiati (2015); Karyada dan Irwanto (2017); Kouki (2018); dan Juniarti et al (2018) hampir semuanya menggunakan sampel dari semua jenis industri. Namun, setiap industri memiliki karakteristik dan kekhasan yang berbeda sehingga akan memiliki dampak yang berbeda (Lavi, 2016…”