IFRS Adoption and Stock Prices of Japanese Firms in Governance System           Transition

PurposeFollowing the mandatory IFRS adoption in 2005, the Continental European accounting systems changed. This study investigates if it influenced the value relevance of intangible assets in Italy.Design/methodology/approachTo measure the value relevance of intangible assets of non-financial firms listed on Borsa Italiana from 2000 to 2015, this study isolates the impact of several classes of intangible assets on stock prices and then classifies firms according to intangible asset intensity.FindingsGoodwill, intellectual property and other rights, start-up costs or other intangible assets are significantly correlated with stock prices when Italian accounting standards were applied prior to 2005, whereas research and development expenditures are not associated with stock prices. The mandatory IFRS adoption has exerted positive effects only for goodwill and research and development expenditures, and it is negative for start-up costs. Further, when intangible-intensive firms are considered in the post-IFRS adoption period, declining value relevance exists relative to intellectual property and other rights or research and development expenditures; goodwill and other intangible assets increase in value relevance.Research limitations/implicationsThis study is subject to country-specific determinants and firm-specific characteristics. It treats accounting standards as exogenous, and the classification reflects the concentration of intangible assets in an industry. By relying on investors’ assessments of risk, it does not sufficiently explore the risk conveyed by future abnormal earnings and earnings volatility.Practical implicationsThis study offers insights for measuring and reporting intangible assets, by specifying that their value relevance depends on their level and aggregation.Originality/valueThis study investigates the value relevance of intangible assets in the post-IFRS period, in reference to intangible-intensive firms. It also divides intangible assets into several classes to specify the value relevance of goodwill.

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Informational Consequences of Mandatory IFRS Adoption in China

International Journal of Accounting and Financial Reporting ◽

10.5296/ijafr.v8i3.13499 ◽

2018 ◽

Vol 8 (3) ◽

pp. 295

Author(s):

Archana Patro

Keyword(s):

Stock Prices ◽

Stock Price ◽

Demand Elasticity ◽

Future Price ◽

Multivariate Techniques ◽

Specific Information ◽

Stock Price Synchronicity ◽

Ifrs Adoption ◽

Mandatory Adoption ◽

The Impact

In China, International Financial Reporting Standards (IFRS) have become mandatory for listed firms in 2007. While earlier research on “voluntary” adopters has provided valuable insights on the impact of IFRS disclosure, these results cannot be generalised in a mandatory setting. We expect effects from mandatory IFRS adoption to be different from those documented for voluntary IFRS adopters since the former group is essentially forced to adopt IFRS. The empirical model, relating to stock price synchronicity with adoption of IFRS, and other firm-specific control variables were analysed using both univariate and multivariate techniques. Different types of panel data estimates were used and compared so as to interpret the results with the best-suited parameters for different data sets for different markets. Studying data covering the period from 2001-2013, the present study examines whether mandatory adoption of IFRS reduces Stock Price Synchronicity for Chinese firms. The empirical results show that IFRS adoption improves information environment by the capitalization of firm-specific information into stock prices, thereby reduces the Stock Price synchronicity. The paper further examines if the information impact was homogeneous across industries. This pattern of decrease in stock price synchronicity after adoption of IFRS is different for different industries taken for analysis. Aerospace & Defense, Automobiles Beverages, Metals & Mining, Retailer& Real Estate Operations have reduced synchronicity but other industries such as Biotech, Electric utilities, Electronic, Leisure products, Renewable energy and Telecom have increased synchronicity. For these industries, the low reliance on market wide information makes reasonable economic sense because they have relatively low demand elasticity. Hence, in demand inelastic industries, future price sensitive factors remain constant and so a changed IFRS accounting regime has little marginal impact. This study provides a different methodological approach by concentrating on Industry wide information effects from the mandatory adoption. These findings have important implications that apply not only to China, but also to other emerging and transitional economies such as India where IFRS is yet to be mandated. Moreover it will help regulators, academicians and practitioners to assess the informational benefit of adopting IFRS.

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Informativeness of stock prices after IFRS adoption in Brazil

Journal of Multinational Financial Management ◽

10.1016/j.mulfin.2018.09.001 ◽

2018 ◽

Vol 47-48 ◽

pp. 46-59 ◽

Cited By ~ 1

Author(s):

F. Henrique Castro ◽

Verônica Santana

Keyword(s):

Stock Prices ◽

Ifrs Adoption

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