The Effects of K－IFRS Adoption upon the Value Relevance of Accounting Information

2018 ◽  
Vol 19 (6) ◽  
pp. 89-115
Author(s):  
Yang－Boo Kim ◽  
Kap－Soon Kim
Keyword(s):  
Value Relevance ◽  
Accounting Information ◽  
Ifrs Adoption

The value relevance of accounting information in the MENA region

2019 ◽  
Vol 17 (3) ◽  
pp. 519-536 ◽  
Author(s):  
Doaa El-Diftar ◽  
Tarek Elkalla
Keyword(s):  
Regression Model ◽  
Developing Economies ◽  
Negative Impact ◽  
Value Relevance ◽  
Accounting Information ◽  
Mena Region ◽  
Content Type ◽  
Ifrs Adoption ◽  
The Impact ◽  
Is Value

Purpose The purpose of this paper is to examine the value relevance of accounting information in the Middle East and North Africa region (MENA) region with an emphasis on the potential impact of IFRS adoption. This paper aims to not only examine the value relevance of accounting information in the MENA region but also draw comparisons between Gulf countries (GCC) and non-GCC country firms to determine whether there are distinct differences across the two regions. Design/methodology/approach To investigate the value relevance of accounting information in the MENA region, two pooled regression models are used based on the Ohlson (1995) model. The first regression model is conducted for the GCC and non-GCC regions separately. A second regression model is conducted using a pooled sample of the MENA region collectively with dummy and interaction variables to further explore the potential differences between the two regions in terms of the value relevance of accounting information. Findings The empirical results show that the measures of accounting information have a highly significant positive relationship with the market value per share for firms in the MENA region, thereby indicating that accounting information in the MENA region is value relevant. Although book value per share and earnings per share are significant determinants of value relevance in both GCC and non-GCC country firms, operating cash flows per share is only a significant determinant of value relevance in non-GCC country firms. The research findings of the study also show a significant negative impact of IFRS adoption on the value relevance of accounting information in the MENA region. Practical implications This research paper provides important insights for investors and regulators by providing evidence that accounting information is value relevant in the MENA region, and that IFRS adoption does not necessarily lead to a greater degree of value relevance. In fact, investors and regulators should be aware that the adoption of IFRS in MENA country firms results in diminished value relevance of accounting information. This finding is of particular significance to policymakers attempting to improve accounting disclosure. Originality/value The paper expands the value relevance of accounting information literature in the context of developing economies, in general, and the MENA region, in particular. There is a paucity of research into the value relevance of accounting information for MENA country firms, particularly in the case of the impact of IFRS adoption. Thus, this paper provides an important contribution in terms of expanding the value relevance literature in relation to IFRS adoption in the MENA region.

IFRS and value relevance: evidence based on Canadian adoption

2016 ◽  
Vol 12 (2) ◽  
pp. 136-160 ◽  
Author(s):  
Oliver N. Okafor ◽  
Mark Anderson ◽  
Hussein Warsame
Keyword(s):  
Empirical Evidence ◽  
Financial Reporting ◽  
Value Relevance ◽  
Accounting Information ◽  
Sensitivity Analyses ◽  
Evidence Based ◽  
Content Type ◽  
Ifrs Adoption ◽  
The Us ◽  
Us Gaap

Purpose – The purpose of this paper is to investigate whether financial information prepared and disclosed under International Financial Reporting Standards (IFRS) has incremental value relevance vs information prepared under generally accepted accounting principles (GAAP) in Canada. Design/methodology/approach – The authors employ a difference in differences methodology and estimate value relevance using: first, the adjusted R2 of regressions of stock price on book value and earnings; second, the adjusted R2 of regressions of stock returns on earnings and changes in earnings; and third, a time series incremental association return estimation. The authors use multiple models including a model similar to the Ohlson (1995) model and a modified Balachandran and Mohanram (2011) model to investigate value relevance in the period 2008-2013. Findings – The authors provide empirical evidence, based on unique Canadian environment, that accounting information prepared and disclosed under IFRS exhibits higher price and returns value relevance than accounting information prepared previously under local GAAP. Sensitivity analyses and yearly trends regressions produce collaborating evidence. Originality/value – The study provides early empirical evidence that value relevance increases in mandatory IFRS adoption, based on unique Canadian adoption. The Canadian adoption is unique because Canada: first, is the first G7 non-European country to adopt IFRS; second, had pursued a dual strategy of harmonizing with the US GAAP while supporting IFRS convergence; third, provided information environment that mitigates the problems associated with measuring the effects of IFRS adoption in the European countries where IFRS or its predecessor – international accounting standards – had permeated the reporting environment prior to the mandatory adoption in 2005; and fourth, allowed firms listed on the US exchanges to continue to use or adopt the US GAAP for financial reporting and thus, provided a group of benchmark firms drawn from the same social-political and economic environment as the treatment firms. The study clarifies prior inconsistent results from European samples.

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.

The Value Relevance and Predictability of IFRS Accounting Information: The Case of GCC Stock Markets

2014 ◽  
Vol 1 (1) ◽  
pp. 215 ◽  
Author(s):  
Abdelmohsen M. Desoky ◽  
Gehan A. Mousa
Keyword(s):  
Financial Reporting ◽  
Stock Markets ◽  
Value Relevance ◽  
Accounting Information ◽  
Listed Companies ◽  
Securities Market ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Financial Reporting Standards ◽  
Ifrs Adoption

This paper investigates some earning attributes (as the value relevance and predictability) of accounting information provided under International Financial Reporting Standards (IFRS ) in the Bahrain Bourse (BHB) and the Muscat Securities Market (MSM). The sample used in this research consists of 280 year-firm observations from 40 different companies listed in BHB; and a total 203 year-firm observations from 29 companies listed in MSM covering the period 2005-11. The findings of the study suggest that, for BHB, the adoption of IFRS leads to improvement in the value relevance of financial reporting contradictory predictability attribute as predictability of accounting information in listed companies of BHB is reduced after the adaption of IFRS. In MSM, the adoption of IFRS captures approximately similar value relevance of accounting information before adoption IFRS, however, predictability of accounting information improves after the adaption of IFRS. It was clear that the IFRS adoption by companies in MSM enhances the predictability of accounting information more than in BHB.

Value Relevance of Accounting Information: A Review of Empirical Evidence Across Continents

2019 ◽  
Vol 8 (2) ◽  
pp. 179-193 ◽  
Author(s):  
Meena Bhatia ◽  
Mwila J. Mulenga
Keyword(s):  
Empirical Evidence ◽  
Empirical Research ◽  
Current Literature ◽  
Value Relevance ◽  
Accounting Information ◽  
Research Papers ◽  
Ifrs Adoption ◽  
Before And After ◽  
Opposite View

In the last two decades, accounting literature has focused increasingly on examining value relevance of accounting information. After the announcement of IFRS adoption, there has been a growth in the literature, which links value relevance of accounting information with IFRS adoption. This study aims to provide a brief literature and presents empirical findings. The purpose is to help future researchers to have the understanding of this nature of the study and identify gaps in the current literature. The article covered 90 empirical research papers published between 1993 and 2016 from various countries across continents, and the majority of them concluded that accounting information is relevant across continents before and after IFRS adoption, while few hold the opposite view. Few studies show no evidence in the improvement of accounting information after IFRS adoption.

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.

scholarly journals The importance of the IFRS in India

2016 ◽  
Vol 12 (2) ◽  
pp. 46-53 ◽  
Author(s):  
Lious Ntoung Agbor Tabot ◽  
Ben C. Outman ◽  
Eva Masárova
Keyword(s):  
Stock Returns ◽  
Financial Reporting ◽  
Value Relevance ◽  
Accounting Information ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Listed Firms ◽  
Ifrs Adoption ◽  
Accounting Numbers ◽  
The Impact

In this article the authors study the impact of the mandatory International Financial Reporting Standard (IFRS) adoption has on the value relevance of accounting numbers based on a sample of 440 listed firms. The aim is to identify the effects of the mandatory IFRS adoption by relying on panel data gathered over the period 2002 to 2012 resulting in more than 4,840 firm-year observations. Two models of Panel regression (stock returns and price models) were employed. The main finding shows that the adoption of IFRS across the studied period results to some improvement in the value relevance of accounting information with the stock return model. With respect to the price models, our result shows that there was slight difference in the value relevance of accounting information after the mandatory IFR adoption across India listed firms.

Sign in / Sign up

Export Citation Format

Share Document