scholarly journals The Impact Of Country-Level vs Firm-Level Factors On The Effectiveness Of IFRS Adoption: The Case Of European Union

2011 ◽  
Vol 10 (10) ◽  
pp. 79 ◽  
Author(s):  
Kanogporn Narktabtee ◽  
Suntaree Patpanichchot
Keyword(s):  
Value Relevance ◽  
Accounting Information ◽  
Firm Characteristics ◽  
Firm Level ◽  
Book Value ◽  
Ifrs Adoption ◽  
Country Level ◽  
Quality Of Accounting Information ◽  
Mandatory Adoption

The mandatory adoption of IFRS has been encouraged worldwide, with the objective to enhance the quality of accounting information. However, this effort is challenged by the argument that several factors affecting financial reporting incentives still vary across countries. Also, Gaio (2010) indicates that firm-level factors also have significant explanatory power on earning quality. Therefore, it is doubtful whether the mandatory adoption of IFRS can always lead to better quality of accounting information. This paper examines the effect of country-level and firm-level factors on value relevance of earnings and book value of equity. Among several country-level factors, this paper focuses on investor protection - proxied by anti-director right index (La Porta et al., 1998). In this study, firm-level factors refer to firm characteristics which allow or induce high use of managerial discretion. These characteristics are proxied by firm size, cash flow volatility, sales volatility, and incidence of negative earnings. Different from prior literatures which focus on level of value relevance, this paper examines the effect of country-level and firm-level factors on change in value relevance of earnings and book value of equity, arisen from the mandatory adoption of IFRS in the year 2005. By comparing value relevance of earnings and book value of equity among European Union countries during the years 1999-2007, the results indicate that the adoption of IFRS leads to improvement in value relevance. In addition, both country-level and firm-level factors have significant influence on the degree of improvement in value relevance from the IFRS adoption. In particular, the firms which operate in a weak investor protection environment and have firm characteristics which induce or allow the managers to use high managerial discretion (i.e., small size, high cash flow volatility, high sales volatility, and frequent incidences of loss) do not experience significant improvement in value relevance from IFRS adoption. The results imply that the IFRS adoption does not ensure better quality of accounting information. The improvement of the quality of accounting information depends on both country and firm characteristics, which influence financial reporting incentives.

The Impact of IFRS Adoption on the Quality of Accounting Information: Systematic Literature Review

2021 ◽  
pp. 5-15
Author(s):  
Achmad Farid Dedyansyah ◽  
◽  
Sri Pujiningsih ◽  
Satia Nur Maharani ◽  
◽  
...  
Keyword(s):  
Literature Review ◽  
Systematic Literature Review ◽  
Value Relevance ◽  
Accounting Information ◽  
Test Model ◽  
European Continent ◽  
Theoretical Approaches ◽  
Quality Of Accounting Information ◽  
The Impact

The quality of accounting information cannot be separated from the adopted accounting standards. More than 87% of countries worldwide have implemented IFRS standards as financial guidelines in their countries. The goal of IFRS is to make companies more transparent and flexible in producing accounting information based on which users can predict future investment values. The purpose of this article is a systematic literature review on the quality of accounting information associated with adopting IFRS. The sample of this study - 125 articles reviewed in four main classifications: research subject areas, measurement of accounting information quality, theoretical approaches, and research methods. Previous research was obtained from online databases such as Science Direct, Emerald Group, Sage Journal, and Taylor & Francis. The PICO framework in this study was applied to minimize bias from previous studies. The analysis results show that average the most articles on the quality of accounting information were found in journals categorized in the accounting field. Most studies have been found on the European continent regarding the quality of accounting information – 52 (37.7%). Determining the quality of accounting information requires several tests. As a result, 49 (38.8%) and 47 (37.1%) articles emphasize the accrual test model and value relevance model in assessing the quality of accounting information. The results show that 56 articles (44.8%) use the regression analysis method to test value relevance, accrual, and timely loss reporting models.

scholarly journals Hedge Accounting in the Brazilian Stock Market: Effects on the Quality of Accounting Information, Disclosure, and Information Asymmetry

2016 ◽  
Vol 27 (71) ◽  
pp. 202-216 ◽  
Author(s):  
Silas Adolfo Potin ◽  
Patrícia Maria Bortolon ◽  
Alfredo Sarlo Neto
Keyword(s):  
Stock Market ◽  
Information Asymmetry ◽  
Value Relevance ◽  
Accounting Information ◽  
Econometric Models ◽  
Hedge Accounting ◽  
Earnings Informativeness ◽  
Information Relevance ◽  
Quality Of Accounting Information

ABSTRACT This paper investigates, in the Brazilian stock market, the effect of hedge accounting on the quality of financial information, on the disclosure of derivative financial instruments, and on the information asymmetry. To measure the quality of accounting information, relevance metrics of accounting information and book earnings informativeness were used. For executing this research, a general sample was obtained through Brazilian companies, non-financial, listed on the Brazilian Securities, Commodities, and Futures Exchange (BM&FBOVESPA), comprising the 150 companies with highest market value on 01/01/2014. Through the general sample, samples were compiled for applying the econometric models of value relevance, informativeness, disclosure, and information asymmetry. The sample for relevance had 758 companies-years observations within the period from 2008 to 2013; the sample for informativeness had 701 companies-years observations with the period from 2008 to 2013; the sample for disclosure had 100 companies-years observations, within the period from 2011 to 2012; the sample for information asymmetry had 100 companies-years observations, also related to the period from 2011 to 2012. In addition to the econometric models, the propensity score matching method was applied to the analyses of the hedge accounting effect on disclosure and information asymmetry. The evidence found for the influence of hedge accounting indicates a relation: (i) positive and significant concerning accounting information relevance and disclosure of derivatives; (ii) negative and significant for book earnings informativeness. Regarding information asymmetry, although the coefficients showed up as expected, they were not statistically significant.

scholarly journals The Association: Early Adoption of IFRS and Value Relevance of Accounting Information

2019 ◽  
pp. 9-15
Keyword(s):  
Value Relevance ◽  
Accounting Information ◽  
Early Adoption ◽  
Quality Of Accounting Information ◽  
The Impact

The objective of this article is to analyze the impact of the early adoption of IFRS on the value relevance of accounting information among the CAC 40 listed companies.In our study we adopted the Ohlson (1995) models in order to study the value relevance of accounting information. Our data was collected manually .The period 2002-2004 was used as the pre anticipation of the IFRS and the period 2004-2006 was used as the post anticipation of the IFRS .The problem therefore of our research is the following is: What is the effect of the early adoption of IFRS on the quality of the accounting information?In the study, our estimates focused on two panels: panel A and panel B. After analyzing the various estimates we found that the early adoption of IFRS has enabled companies in panel A, companies which adopted IFRS in an anticipated manner, to provide investors with accounting information with greater value relevance compared to the companies of panel B.Thanks to this study we can confirm that the early adoption of IFRS significantly enhanced the quality of accounting information for panel A.

scholarly journals Η χρησιμότητα των χρηματοοικονομικών πληροφοριών και η επίδρασή τους στις αποδόσεις των μετοχών

2012 ◽  
Author(s):  
Παναγιώτης Δημητρόπουλος
Keyword(s):  
Financial Reporting ◽  
Value Relevance ◽  
Accounting Information ◽  
Cash Flows ◽  
Listed Firms ◽  
Financial Reporting Standards ◽  
Quality Of Accounting Information ◽  
Valuation Process ◽  
Banking Institutions

The present doctoral thesis aims to study the issues of value relevance and quality of accounting information within the context of the Greek capital market. Using a sample of Greek listed firms from all business sectors (including banking institutions) and applying alternative methodologies, we examined the main factors (internal and exrternal) which shape and determine the value relevance of accounting information. Our empirical evidence indicate that earnings (more than any other accounting figure) cash flows, common equity and accruals seem to have significant impact on investor‟s desicions and contribute to the valuation process of the Greek listed firms. Also the quality of accounting information seems to be positively affected from the efficiency of corporate governance, the adoption of International Financial Reporting Standards (IFRS) and the quality of statutory audits. On the contrary, speculation and the adoption of the euro currency by the Greek government in 2001 have impacted negatively in the quality of accounting information.

scholarly journals Integrated Reporting Practices in Europe and Value Relevance of Accounting Information under the Framework of IIRC

2018 ◽  
Vol 13 (5) ◽  
pp. 1 ◽  
Author(s):  
Salvatore Loprevite ◽  
Daniela Rupo ◽  
Bruno Ricca
Keyword(s):  
Financial Reporting ◽  
Price Level ◽  
Value Relevance ◽  
Accounting Information ◽  
Financial Capital ◽  
Integrated Reporting ◽  
Book Value ◽  
Reporting Practices ◽  
Level Model

The research has been conducted on a sample of European companies with the aim to investigate whether the adoption of the Integrated Reporting (IR) affects the value relevance of summary accounting information. The relations between Market Value (MV) and traditional accounting information (Book Value and Earnings) are studied by a linear price-level model, typical of the studies on the value relevance of accounting information. The results of analysis show that the degree of value relevance of Earnings is significantly different for companies that publish an Integrated Report compared to companies adopting traditional financial reporting. The study confirms the assessment made by IIRC and the other advocates: Integrated Reporting is expected to improve the quality of traditional accounting information for providers of financial capital.

scholarly journals The Impact of IFRS Adoption on the Value Relevance of Accounting Information: Evidence from the Insurance Sector

2018 ◽  
Vol 13 (4) ◽  
pp. 138
Author(s):  
Ali A. Alnodel
Keyword(s):  
Stock Market ◽  
Financial Reporting ◽  
Value Relevance ◽  
Insurance Industry ◽  
Evaluation Model ◽  
Accounting Information ◽  
Insurance Companies ◽  
Book Value ◽  
Ifrs Adoption ◽  
The Impact

This paper aims to investigate whether the adoption of International Financial Reporting Standards (IFRS) increases the value relevance of accounting information for insurance firms listed in the Saudi stock market. The study employs the Ohlson model (1995) and the Easton–Harris valuation model (1991) in order to examine the association among stock market value and book value and earnings per share. The data was collected for 21 insurance companies listed in the Saudi stock market during the period 2007–2014, which covered pre- / post-IFRS periods. The results reveal that the book value of equity becomes less value relevant whereas earnings are more value relevant. Further analysis suggests that the increase in the value relevance of accounting information is positively influenced by companies’ attributes, especially profitability and size rather than IFRS adoption. These results highlight the importance of institutional factors in the determination of the value relevance of accounting information in emerging stock markets. These results also expand IFRS research through a consideration of the insurance industry, which is more vulnerable to the accounting evaluation model.

scholarly journals KUALITAS INFORMASI AKUNTANSI SEKTOR INDUSTRI SEBELUM DAN SELAMA PANDEMI COVID-19: STUDI NEGARA-NEGARA ASEAN

2021 ◽  
Vol 26 (2) ◽  
pp. 1-8
Author(s):  
Slamet Sugiri ◽  
Retno Yuni Nur Susilowati
Keyword(s):  
Information Quality ◽  
Value Relevance ◽  
Earnings Quality ◽  
Accounting Information ◽  
The Philippines ◽  
Accrual Quality ◽  
Quality Of Accounting Information ◽  
Asean Countries ◽  
The Impact

The purpose of this paper is to examine the effect of the Covid-19 pandemic on the quality of accounting information in terms of accrual quality and value relevance. This study uses a sample of companies listed on stock exchanges in five ASEAN countries, Indonesia, Malaysia, the Philippines, Singapore, and Thailand, for the period 2009-2020. OLS pooled regression model was estimated with panel data. The results showed that the COVID-19 pandemic impacted earnings quality, but not on value relevance of accounting information quality. Enforcement of accounting and auditing standards can reduce the impact of the COVID-19 pandemic in improving earnings quality. However, investor protection is not adequate to improve the quality of accounting information during the COVID-19 pandemic.

Determinants of the quality of disclosed earnings and value relevance across transitional Europe

2015 ◽  
Vol 5 (3) ◽  
pp. 325-349 ◽  
Author(s):  
Sheraz Ahmed
Keyword(s):  
Value Relevance ◽  
Listed Companies ◽  
Future Research ◽  
Firm Level ◽  
Policy Makers ◽  
Content Type ◽  
Transparency International ◽  
Corporate Transparency ◽  
Country Level

Purpose – Earlier studies have found that the country characteristics play important role in measuring the corporate transparency. The purpose of this paper is to examine whether the firm-level determinants play an important role in corporate transparency measured as the quality of disclosed earnings across transitional Europe and what role an overall transparency measured by the Corruption Perception Index plays in it. This paper further tests if the market reacts similarly to discretionary and non-discretionary components of earnings across different groups of countries with respect to transparency. Design/methodology/approach – The financial and ownership data of listed companies in ten European countries is obtained from Amadeus. The transparency ratings are obtained from Transparency International. The sample consists of a panel of 2001 listed companies and modified Jones model of Dechow et al. (1995) is used to measure the quality of earnings. Findings – This paper shows that the firm-level determinants (except firm size) of the quality of earnings are different among different groups made on the basis of transparency ratings. However, the determinants of the quality of earnings are not different within each group. The ownership structure of companies plays important role in determining the quality of earnings in most transparent countries whereas financial factors play significant role in least transparent countries. The markets respond positively to earnings quality in most transparent group of countries. Research limitations/implications – The results of this study provide interesting basis for future research on economic and social integration of Europe. Although the policy makers are trying to integrate the countries through common Laws and decrees but examining the firm-level factors such as size, growth and ownership are still important. The regulators should address the issue of corporate transparency in Europe by looking at the importance of these factors with respect to overall transparency. Originality/value – This study extends the knowledge, not only for academicians and investors but for policy makers as well. This study re-emphasizes the role of country-level transparency and firm-level determinants of the corporate transparency within Europe.

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