scholarly journals Relative and Incremental Value Relevance of Accounting Information under the Integrated Reporting Approach: Evidence from South Africa

2019 ◽  
Author(s):  
Kenny Fernando ◽  
Ancella A. Hermawan
Keyword(s):  
South Africa ◽  
Value Relevance ◽  
Accounting Information ◽  
Integrated Reporting ◽  
Incremental Value

scholarly journals A comparison of the value relevance of interim and annual financial statements

2017 ◽  
Vol 20 (1) ◽  
Author(s):  
Mbalenhle Zulu ◽  
Marna De Klerk ◽  
Johan G.I. Oberholster
Keyword(s):  
Value Relevance ◽  
Accounting Information ◽  
Financial Statements ◽  
Sample Period ◽  
Book Value ◽  
Incremental Value ◽  
Annual Reporting ◽  
Interim Earnings ◽  
A Company ◽  
Is Value

Background: This study tests the value relevance of interim accounting information. The study also explores whether the value relevance of annual and interim financial statements has changed over time.Aim: It explores whether the value relevance of interim financial statements is higher than the value relevance of annual financial statements. Finally, it investigates whether accounting information published in interim and annual financial statements has incremental value relevance.Setting: Data for the period from 1999 to 2012 were collected from a sample of non-financial companies listed on the Johannesburg Stock Exchange.Method: The Ohlson model to investigate the value relevance of accounting information was used for the study.Results: The results show that interim book value of equity is value relevant while interim earnings are not. Interim financial statements appear to have higher value relevance than annual financial statements. The value relevance of interim and annual accounting information has remained fairly constant over the sample period. Incremental comparisons provide evidence that additional book value of equity and earnings that accrue to a company between interim and annual reporting dates are value relevant.Conclusion: The study was conducted over a long sample period (1999–2012), in an era when a technology-driven economy and more timely reporting media could have had an effect on the value relevance of published accounting information. To the best of our knowledge, this is the first study to evaluate and compare the value relevance of published interim and annual financial statements.

scholarly journals Compliance With International Financial Reporting Standards and Value Relevance of Accounting Information in South Africa

2021 ◽  
Vol 12 (4) ◽  
pp. 277
Author(s):  
Unity Maqeda Putsai ◽  
Msizi Mkhize
Keyword(s):  
South Africa ◽  
Financial Reporting ◽  
Value Relevance ◽  
Stock Exchange ◽  
Accounting Information ◽  
Positive Association ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Significant Positive Association ◽  
Compliance Level

The objective of the study is to investigate the relationship between the International Financial Reporting Standard (IFRS 1) and the value relevance (VR) of accounting information. In this study forty-six companies listed on the Johannesburg Stock Exchange during the period 1993 to 2017. Panel data is used to compare the period before and after IFRS. The companies in the sample are composed of the following sectors; mining, manufacturing, banks and investment companies, real estate, general industry, retailers, construction and material, chemical and software, and computers. Based on the yearly financial reports published by public companies in South Africa, the study employed the Cookes (1992) Unweighted Disclosure Index to measure the level of compliance in South Africa. Fifty-six disclosure elements from IFRS 1 were utilized to measure the compliance level. Thereafter Ohlson (1995) Model is used with dummy variables to compare the pre-and post-IFRS period. First, the study reflected that most of the South African companies exhibit higher compliance rates ranging from 87 to 93.417 which is impressive. On the other hand, 4 companies recorded Medium level compliance that is between 60% to 79% compliance level. The findings further revealed that there is a significant positive association between compliance with IFRS 1 and the value relevance of accounting information.

scholarly journals Value Relevance of Integrated Reporting using a Novel Approach: Comparative Cross Country Evidence of Mandatory and Voluntary Implementers

2021 ◽  
Author(s):  
◽  
FJ Mohaimen
Keyword(s):  
Linear Model ◽  
Value Relevance ◽  
Explanatory Power ◽  
Accounting Information ◽  
Additive Models ◽  
Integrated Reporting ◽  
Novel Approach ◽  
Cross Country ◽  
Log Linear ◽  
Reporting Environment

<p>This thesis examines the value relevance of accounting information under integrated reporting (IR) in a comparative mandatory and voluntary setting. A meta review is conducted of all published work focusing on integrated reporting since 2011, which provides detailed insight into the gaps in the IR literature. Multiplicative log-linear model is used in measurement, which is a novel technique that mitigates the shortcomings of traditional value relevance models. The findings show that value relevance of summary accounting information increases after the implementation of IR in the mandatory setting. In the voluntary setting, market effect and the existing reporting paradigm effect the value relevance of accounting information under IR. If the market is large and existing reporting requirements are robust voluntary adoption of IR has minimal to no effect. However, in smaller markets with less rigorous reporting environment, adoption of IR does result in increased value relevance of accounting information. Compared to traditional models, the multiplicative model provides estimates that are more stable over time and shows better explanatory power. Overall, the findings of this thesis show that capital providers value the information content of IR under specific circumstances. This thesis contributes to the IR and value relevance literature by providing the first comparative cross-country evidence of the effect of IR in the change in value relevance of reported accounting information. It provides policy relevant input to the standard setters of IR by demonstrating the effect of IR in the decision usefulness of summary accounting information. The thesis further provides robust evidence of the efficacy of using the multiplicative log-linear model in measuring value relevance instead of the traditional linear additive models.</p>

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.

Sustainability reporting or integrated reporting: Which one is valuable for investors?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ika Permatasari ◽  
Ika Permatasari ◽  
I Made Narsa
Keyword(s):  
Value Relevance ◽  
Accounting Information ◽  
Sustainability Reporting ◽  
Financial Information ◽  
Integrated Reporting ◽  
Content Type ◽  
Reporting Practices ◽  
Corporate Reporting ◽  
Sustainability Reports ◽  
International Integrated Reporting Council

Purpose This research is motivated by the development of dialogue and debate regarding company reporting in the form of sustainability reporting (SR) – which is separate from the annual report (AR) – or integrated reporting (IR). Research into SR and IR is still fascinating, and this study addresses the debate about them. This study aims to examine which of the two reports is more valuable for investors, and also examine whether IR has value relevance because the information in the IR could reinforce the importance of the accounting information. Design/methodology/approach As with previous studies, we adopted a valuation approach – the Ohlson model – to assess the value relevance of non-financial information (in the form of SR/IR) and financial information. As a preliminary study, we used non-financial information as a binary variable, i.e. a group of companies that issue sustainability reports and a group of companies that issue integrated reports. Therefore, they complement and interact with the financial statements’ information. This paper used panel data consisting of 931 firm-years of SR issuers and 922 firm-years of IR issuers in Europe and Africa in the period from 2005 to 2019. Findings The results showed that SR had a higher value relevance than IR. However, when the authors interact the corporate reporting form with the accounting information, IR had value relevance because the information contained in the IR could reinforce the importance of the accounting information. Practical implications This study will support regulators in various countries to monitor the reporting practices of companies in those countries. The results of this study provide evidence that sustainability reports get a higher response than integrated reports. However, when interacted with the accounting variables, information in the IR is considered to be more relevant than that found in the SR. Therefore, it is hoped that the results of this study will help the International Integrated Reporting Council (IIRC) in reviewing IR practices around the world so that the implementation of IR practices can be realized in accordance with the mission that the IIRC wants to achieve. Originality/value Research into the value relevance of SR and IR has been carried out by several previous researchers separately, but to the best of the author’s knowledge, there are no studies comparing the value relevance of the two.

scholarly journals The impact of intangibles on the value relevance of accounting information: Evidence from French companies

2016 ◽  
Vol 12 (2) ◽  
pp. 506 ◽  
Author(s):  
Bilal Kimouche ◽  
Abdenaser Rouabhi
Keyword(s):  
Value Relevance ◽  
Accounting Information ◽  
Financial Statements ◽  
Cash Flows ◽  
Market Values ◽  
Incremental Value ◽  
The Impact ◽  
Book Values ◽  
Examination Process ◽  
Practical Implications

Purpose: The paper aims to explore whether intangible items that recognised in financial statements are value-relevant to investors in the French context, and whether these items affect the value relevance of accounting information. Design/methodology/approach: Empirical data were collected from a sample of French listed companies, over the nine-year period of 2005 to 2013. Starting of Ohlson’s (1995) model, the correlation analysis and the linear multiple regressions have been applied. Findings: We find that intangibles and traditional accounting measures as a whole are value relevant. However, the amortization and impairment charges of intangibles and cash flows do not affect the market values of French companies, unlike other variables, which affect positively and substantially the market values. Also goodwill and book values are more associated with market values than intangible assets and earnings respectively. Finally, we find that intangibles have improved the value relevance of accounting information. Practical implications: French legislators must give more interest for intangibles, in order to enrich the financial statements content and increasing the pertinence of accounting information. Auditors must give more attention for intangibles’ examination process, in order to certify the amounts related to intangibles in financial statements, and hence enrich their reliability, what provides adequacy guarantees for investors to use them in decision making. Originality/value: The paper used recently available financial data, and proposed an improvement concerning the measure of incremental value relevance of intangibles items.

scholarly journals Value Relevance of Integrated Reporting using a Novel Approach: Comparative Cross Country Evidence of Mandatory and Voluntary Implementers

2021 ◽  
Author(s):  
◽  
FJ Mohaimen
Keyword(s):  
Linear Model ◽  
Value Relevance ◽  
Explanatory Power ◽  
Accounting Information ◽  
Additive Models ◽  
Integrated Reporting ◽  
Novel Approach ◽  
Cross Country ◽  
Log Linear ◽  
Reporting Environment

<p>This thesis examines the value relevance of accounting information under integrated reporting (IR) in a comparative mandatory and voluntary setting. A meta review is conducted of all published work focusing on integrated reporting since 2011, which provides detailed insight into the gaps in the IR literature. Multiplicative log-linear model is used in measurement, which is a novel technique that mitigates the shortcomings of traditional value relevance models. The findings show that value relevance of summary accounting information increases after the implementation of IR in the mandatory setting. In the voluntary setting, market effect and the existing reporting paradigm effect the value relevance of accounting information under IR. If the market is large and existing reporting requirements are robust voluntary adoption of IR has minimal to no effect. However, in smaller markets with less rigorous reporting environment, adoption of IR does result in increased value relevance of accounting information. Compared to traditional models, the multiplicative model provides estimates that are more stable over time and shows better explanatory power. Overall, the findings of this thesis show that capital providers value the information content of IR under specific circumstances. This thesis contributes to the IR and value relevance literature by providing the first comparative cross-country evidence of the effect of IR in the change in value relevance of reported accounting information. It provides policy relevant input to the standard setters of IR by demonstrating the effect of IR in the decision usefulness of summary accounting information. The thesis further provides robust evidence of the efficacy of using the multiplicative log-linear model in measuring value relevance instead of the traditional linear additive models.</p>

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