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Summary Statistics for Pooled Regression of Stock Price on Book Value of Equity and Net Income for firm-years with market capitalization greater than or less than $50m:
Source publication
We investigate whether the adoption of IFRS increases the value relevance of accounting information for firms listed on the Australian Securities Exchange. Using a longitudinal study that covers pre-IFRS and post-IFRS periods during 1990-2008, we find that the combined relevance of book value of equity and earnings alters little with IFRS adoption....
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Financial statements as well as financial standards are always considered as primary sources for getting rich information of firms. The standards are normally divided in two categories of economic and accounting and each of these standards shows one of the specifications of the company and has its own advantageous and disadvantageous. There are dif...
Citations
... They suggested that a conservative approach 7 and/or lack of incentives to use fair value account for most companies, except banks, insurance companies and companies holding investment properties. Chalmers et al. (2011) investigated the value relevance of earnings and equity book value using a longitudinal study that covers pre-IFRS and post-IFRS periods from 1990 to 2008 in Australia. They relied on the ability of equity book value and earnings, to capture information that affects the share price as a measure of value relevance of these two accounting numbers (equity book value and earnings). ...
This thesis empirically investigates the role of the enterprise risk management system implementation level in capturing firm managerial incentives. This system plays an important role in understanding the association between international financial reporting standards and the capital market. Listed firms in the Australian market were used for the period 2000-2010 for this purpose, and the Australian market was chosen because it is considered to be a strong legally enforced capital market. Descriptive statistic tests were used to study the sample characteristics. In addition, panel data is analysed in two regression models to achieve the study goals by providing a reference to compare the use of international financial reporting standards (IFRS) and generally accepted accounting principles (GAAP) periods in Australia, as Australia adopted IFRS as of January 1st 2005, thus enabling an analysis of their effect on firm incentives and cost of equity capital. Finally, the researcher used the results of the term “IFRSA*ERMIL” in the two regression models, to capture the role of ERMIL on the economic consequences of IFRS adoption, through its indirect effect on firm incentives. The study results imply that IFRS adoption has a statistically significant negative effect on firm disclosures transparency _ with a positive effect on earning management_ when compared with GAAP adoption for the three models. Also, IFRS were found to have a statistically significant positive effect on cost of equity capital, which implies that the adoption of IFRS by Australian firms increases cost of equity capital for firm stock. Furthermore, implementing higher levels of ERM by Australian firms during the mandatory IFRS adoption period has no statistically incremental effect on the cost of equity capital, thus adopting higher level of ERM does not capture firm incentives in IFRS period. Together, implementing higher level of ERM by Australian firms in IFRS period, is not recognised by investors as a signal of more transparent disclosures nor does it encourage investors to use low discount rate to discount future cash flows, which as a result, does not have an effect on cost of equity capital. Consequently, these results suggest that the implementation of ERM by Australian firms does not reduce the contractual costs between investors and management, whilst adopting IFRS does. Future research may use other techniques and/or strategies other than ERM, to capture the firm incentives, and as a result, may have economic consequences.
... In respect to the adoption of IFRS; while the studies of Hung and Subramanyam (2007); Kargin (2013); Halonen et al., (2013);Agostino et al., (2011) revealed an improvement in the value predictive power of assetbook value after adoption; the reports of the studies of Umoren and Enang (2015); Kousenidis et al., (2010) showed a decline in the value predictive power of asset-book value on firm share price. The studies of Ahmed et al., (2013); Macedo et al., (2013); Chalmers et al., (2011) showed that there is no difference on the effect of asset-book value on firm value before and after IFRS adoption. ...
Corporate entities are under obligations to provide information about the financial position and performance and are expected to be in accordance with laid down standards and other statutory regulations. Studies showed that several reports of financial manipulations exposing firms which proved to be profit-making became insolvent, this poses a big question as to whether reporting under GAAP is value relevant. This study examined the influence of relevance of financial information on the value of listed Oil and Gas firms in Nigeria before and after the adoption of IFRS. The study was an expost-facto research using all the listed six (6) petroleum marketing firms as published by the Nigerian Stock Exchange (NSE) on 1st March, 2019 as sample subjects for a period of twelve (12) years, which was 6 years (2006-2011) prior adoption and 6 yeras (2012-2017) after adoption of IFRS. Data obtained from published audited financial statements already validated by external auditors were used and analyzed using multiple regression with the aid of Stata/IC 11.0 software. The study discovered that financial information (Earnings Per Share (EPS), Book Value Per Share (BVPS) and Operating Cash flow Per Share (OCFS)) significantly affect value of listed oil and gas companies in Nigeria before and after the adoption of IFRS, and that the predictive power of financial information improved after the adoption of IFRS (Pre: Adj. R 2 = 0.46, Wald (3) = 22.03, p < 0.05; Post: Adj. R 2 = 0.66, F (3, 32) = 23.64, p < 0.05; Combined: Adj. R 2 = 0.50, F (3, 32) = 11.57, p < 0.05). The study concluded that transition in accounting standards has improved the predictive powers of earnings, operating cash flow and book value of asset of companies. Standard setters should continually update the standards and firm managers should improve on the level of compliance to improve the quality of the financial information.
... However, Clarkson et al. (2011) document no change in the value relevance before and after mandatory IFRS adoption in 2005 for firms in the European Union and Australia. Though Chalmers et al. (2011) find an improvement in value relevance of earnings, but not the book value of equity, following IFRS adoption for their sample of mainly industrial firms covering the time period 1990-2008. Similarly, Bonetti et al. (2012) shows IFRS 7's sensitivity analysis about currency risk is informative for investors. ...
Despite the positive effects of the adoption of International Financial Reporting Standards (IFRS) noted in the literature, standard setters have issued reports suggesting that the required disclosures in IFRS have become too burdensome and should be reduced. We examine this disclosure overload problem by testing whether the disclosure reduction recommendations of the Excess Baggage Report issued by professional accounting bodies from Scotland and New Zealand in 2011 are associated with companies’ disclosure incentives and are value relevant for a sample of 196 Australian listed companies. The Excess Baggage Report classifies current IFRS disclosure requirement items into three categories: Retain; Delete; and Disclose if Material. We find that Retain items are disclosed the most, followed by those classified as Disclose if Material, and then by Delete items. Only Retain items are significantly associated with companies’ disclosure incentives. We also find that these disclosure categories are value relevant, especially for below‐median profitability firms. Our findings may provide input to the IASB’s ongoing Disclosure Initiatives project.
... Several studies addressed the effects of adopting IFRS on the value relevance of accounting information that are related to the adoption of IFRS at different times and in different countries. These findings are mixed, with some studies showing that adopting IFRS improves value relevance (Bartov et al., 2005;Chalmers et al., 2011) and others showing that it worsens value relevance (Callao et al., 2007), while yet others find no conclusive evidence either way (Horton and Serafeim, 2010). Research conducted by Cormier (2013), based on a sample of 184 Canadian companies composing S&P/TSX index indicates that implementing IFRS enhances the value relevance of earnings but only for companies with good governance. ...
Purpose
The purpose of this study is to examine the effects of adopting International Financial Reporting Standards (IFRS) on financial statements of the largest Canadian firms (S&P/TSX 60) listed on the Toronto Stock Exchange (TSX).
Design/methodology/approach
We investigate the financial statement effects of 46 companies from the S&P /TSX 60 index which report under IFRS in 2011 and switched to IFRS from CGAAP. We used use panel data analysis, which can be considered as more powerful when conducting cross-sectional and in time analysis among companies. Due to weakness of Cramer statistic on R-square, we used interaction terms as suggested by Hope (2007).
Findings
Consistent with our perceptions, we find that significant effects of adopting IFRS are associated with industry practices. The empirical results show that the adoption of IFRS in Canada created more relevant financial reporting for book value of equity and net income in the post-adoption periods.
Originality/value
The study should be of interest to U.S. regulators considering IFRS adoption by U.S. publicly traded companies as well as to regulators, standard setters and listed companies in all countries worldwide that are in transition to IFRS.
... Clarkson et al. (2011) report no change in the value relevance of book value and earnings pre-and post-IFRS adoption. However, Chalmers et al. (2011) document an increase in the value relevance of earnings, but not shareholders' equity, upon the adoption of IFRS. Furthermore, Lai et al. (2013) document a decrease in accrual reliability and a decrease in conditional conservatism subsequent to IFRS adoption. ...
This article examines the implementation errors that are made when accounting standards are implemented for the first time. Focusing on the transition to the International Financial Reporting Standards (IFRS), we provide evidence on the causes of these errors as well as the economic consequences of disclosing these errors. We find that the quality of both the chief financial officers (CFOs) and the auditors are associated with less implementation errors. We also find that there is a learning process as later adopters of IFRS report less errors compared to early adopters in the financial reporting cycle. In terms of the consequences of disclosing these errors, we find that firms reporting more implementation errors experience an increase in information asymmetry when these errors become known to market participants. Furthermore, we find a positive association between implementation errors and increases in audit fees when the implementation errors are disclosed. Our results are robust with respect to a number of sensitivity tests.
... The evidence on the consequences of IFRS adoption on the persistence of earnings is also mixed. For instance, Atwood, Drake, Myers, and Myers (2011) compare earnings reported under IFRS versus local GAAP in an international sample and find no differences in persistence, whereas Chalmers et al. (2011) ...
... Our findings suggest that the mandatory adoption of IFRS has led to net income measures of higher quality, since post-IFRS bottom-line earnings are more value relevant without altering the level of persistence. Although previous studies have found a higher value relevance of net income under IFRS ( Barth et al., 2008Barth et al., , 2014Chalmers et al., 2011;Choi et al., 2013), our results contribute to the literature by showing that, at least in the Spanish case, operating income also improves its value relevance. Since the non-recurring items were value relevant in the pre-adoption period, the increase in the value relevance of operating income is consistent with the inclusion of some of these items in this income measure after IFRS adoption. ...
We examine whether the switch to IFRS (International Financial Reporting Standards) has affected the value relevance and persistence of net income. In addition, since IFRS adoption has involved changes in the location of nonrecurring items in the income statement, we also examine whether these changes have influenced the value relevance, persistence, and predictive value of the main income measures. Using a sample of Spanish listed firms, we find an increase in the value relevance of net income and non-significant changes in its persistence after 2005. We also find that nonrecurring items were value relevant in the pre-adoption period and that the operating income is more value relevant after IFRS adoption. This suggests that the significant increase in the value relevance of operating income could be explained by the inclusion in this income measure of former extraordinary and special items. We also observe that the former extraordinary section under SAS (Spanish Accounting Standards) was persistent, whereas the income measure of net profit/loss from discontinued operations under IFRS is neither value relevant nor persistent. We do not find significant changes in the attributes of financial income, but we do observe an increase in the value relevance of other consolidated items and corporation tax after IFRS adoption.
... It is argued that political and legal aspects provide a much more significant influence on standard development and implementation of accounting structure. Differences in legal systems have impact on quality of accounting information in both the developed and emerging countries (Hung, 2001;Bae et al., 2006;Hung & Subramanaym, 2007;Capkun et al., 2008;Jermokwaticz, 2004;Chalmers et al., 2011). For instance, Rahman and Wulandari (2004) found that the relationship between the value relevance of accounting information and accounting regulatory settings is stronger for code law and emerging market than for common law and developed markets. ...
... Several studies noted that quality of accounting information has improved following the IFRS, because IFRS provides fewer alternatives to the management and they have less chance to manipulate the financial statements. Additionally, IFRS facilitates and develops the legal enforcement in the country which eventually increases the relevance of accounting information (Capkun et al., 2008;Barth et al., 2008;Christensen et al., 2008;Chalmers et al., 2010;Chen et al., 2010;Byard et al., 2011;Gjerde et al., 2011;Chalmers et al., 2011;Jermakowicz, 2004). On the contrary, many researchers noted that quality of information has not been improved following IFRS, because IFRS is principle-based standards and provides greater space for management to manipulate the accounting information opportunistically (Hung & Subramanaym, 2007;Paananen & Lin, 2008;Goodwin et al., 2008;Barth et al., 2008;Kvaal & Nobes, 2010;Ahmed et al., 2010;Gaston et al., 2010). ...
... This choice was made on the argument that beta coefficient is highly biased in a return model as compared to price model (Kothari & Zimmerman, 1995). Further, Ohlson model has been widely used in the literature (Burgstahler & Dichev, 1997;Collins et al., 1997, Hung & Subramanaym, 2007Paananen & Lin 2008;Stergios et al., 2008;Barth et al., 2008;Christensen et al., 2008;Capkun et al., 2008;Chalmers et al., 2010;Chen et al., 2010;Byard et al., 2010;Ahmed et al., 2010;Gaston et al., 2010;Chalmers et al., 2011;Gjerde et al., 2011;Jermakowicz, 2004;Kvaal & Nobes, 2011). Consistent with these studies, the model is specified as follows: ...
The value relevance of accounting information in the contemporary electronic and institutionally planned market environment has acquired considerable consideration since accounting regulators have positioned the value relevance as the primary feature of accounting information. Given such phenomenon, the existence of transparency related to accounting information in financial markets is a significant issue. IFRS standards have some prerequisite to get the maximum output in terms of getting quality reports. These prerequisites include investor protection, strictly enforced laws, transparency, and active stock market. This study investigates the economic consequences of mandatory IFRS reporting in the domain of value relevant of accounting information in Pakistan. We used panel data methodologies by incorporating the Ohlson (1995) price and product valuation model. The Study has utilized the data of one hundred and seventy (170) firms listed on the Karachi stock exchange from 2006-2010. The overall results show that both earnings per share and book value have positive and significant influence on the share price. Furthermore, the relationship between share price, book value, and earnings per share signifies that relationship tends to deteriorate with the passage of time following IFRS implementation. The study further finds that book value is more relevant than earning per share in pooled, fixed, and random effect.
... Çalışmada muhasebe kalitesi ile ilgili literatürde sıkça kullanılan üç temel hipotez test edilmiştir. Bunlardan birincisi kâr yönetiminin göstergesi olarak kabul edilen isteğe bağlı tahakkuklardaki azalış (Jones, 1991;Dechow, Sloan, & Sweeney, 1995;Kothari, Leone, & Wasley, 2005;Zéghal, Chtourou, & Sellami, 2011); ikincisi net kârdaki değişimlerin varyansındaki artış, net kârdaki değişimlerin varyansının nakit akışlarındaki değişimin varyansına oranındaki artış ve nakit akışları ile tahakkuklar arasındaki daha az negatif korelasyon (Lang, Raedy, & Yetman, 2003;Barth, Landsman, & Lang, 2008;Chen, Tang, Jiang, & Lin, 2010); üçüncüsü ise muhasebe rakamlarının (net kâr ve özsermaye defter değerinin) hisse senedi fiyatına yansıma derecesindeki artıştır (Amir, Harris, & Venuti, 1993;Lang, Raedy, & Yetman, 2003;Barth, Landsman, & Lang, 2008;Chen, Tang, Jiang, & Lin, 2010;Clarkson, Hanna, Richardson, & Thompson, 2011;Chalmers, Clinch, & Godfrey, 2011). (Dechow, Sloan, & Sweeney, 1995) ...
Bu çalışmada 2005-2010 tarihleri arasında uygulanan UFRS’nin, 1997-2002 tarihleri arasında uygulanan TDMS’den daha kaliteli muhasebe bilgileri üretip üretmediği test edilmiştir. Çalışmada kâr yönetimi, kâr düzleştirmesi ve muhasebe bilgilerinin hisse senedi piyasalarına yansıma derecesi muhasebe kalitesinin temel ölçütleri olarak ele alınmıştır. Daha düşük kâr yönetimi ve kâr düzleştirmesi ile daha yüksek yansıma derecesi, daha yüksek muhasebe kalitesi demektir. Muhasebe kalitesi ölçütleri için de çeşitli temsilciler kullanılmıştır.
Kâr yönetimi için kullanılan temsilci, yöneticilerin muhasebe sistemine müdahalesini ortaya çıkaran isteğe bağlı tahakkuklardır. İsteğe bağlı tahakkukların yüksekliği, kâr yönetimine işaret etmektedir. Kâr düzleştirmesi için kullanılan temsilciler ise, net kârdaki değişimlerin varyansı; net kârdaki değişimlerin varyansının nakit akışlarındaki değişimlerin varyansına oranı ve tahakkuklar ile nakit akışları arasındaki negatif korelasyondur. Net kârdaki değişimlerin varyansı ve net kârdaki değişimlerin varyansının nakit akışlarındaki değişimlerin varyansına oranının düşüklüğü ve tahakkuklar ile nakit akışları arasında daha fazla negatif korelasyon kâr düzleştirmesine işaret etmektedir. Son olarak, muhasebe bilgilerinin hisse senetlerine yansıma derecesi için kullanılan temsilciler de, hisse başına özsermaye defter değeri ve hisse başına net kâr rakamlarının hisse senedi fiyatını açıklama gücü ve hisse başına net kâr rakamı ile hisse senedi getirileri arasındaki ilişkidir. Daha fazla yansıma derecesi ve daha fazla açıklama gücü, daha yüksek muhasebe kalitesi anlamına gelmektedir.
Analizler sonucunda elde edilen bulgular, UFRS döneminde muhasebe kalitesinin arttığını göstermektedir. Ampirik sonuçlara göre, UFRS döneminde isteğe bağlı tahakkuklar önemli ölçüde azalmıştır. Net kârdaki değişimlerin varyansı azalmasına rağmen, bu varyansın nakit akışlarındaki değişimlerin varyansına oranı artmıştır. Bu durumun, UFRS döneminde tahakkuklarda meydana gelen düzleşme olduğu sonucuna varılmıştır. Tahakkuklar ile nakit akışları arasındaki korelasyon da UFRS döneminde TDMS dönemine göre daha az negatif olarak gerçekleşmiştir. Özsermaye defter değeri ve net kâr rakamlarının hisse senedi fiyatına yansıma derecesi UFRS döneminde daha yüksek çıkmıştır. Son olarak net kâr ile hisse senedi getirisi arasındaki ilişki, örneklem iyi haber (pozitif getiri) ve kötü haber (negatif getiri) olarak ayrı ayrı analize tabi tutularak ölçülmüştür. TDMS döneminde iyi haberler ile net kâr arasındaki ilişki UFRS dönemine göre daha yüksek çıkarken, UFRS döneminde kötü haberler ile net kâr arasındaki ilişki daha yüksek çıkmıştır. Bu durum da UFRS döneminde muhasebe kalitesinin arttığını göstermektedir.
Sonuç olarak, muhasebe kalitesi için kullanılan altı temsilciden beş tanesi beklentiler doğrultusunda UFRS döneminde muhasebe kalitesinin arttığına işaret ederken, yalnızca bir tanesi TDMS döneminde muhasebe kalitesinin daha yüksek olduğunu göstermiştir.
This paper to provide a brief literatur and present empirical findings. The article covered 36 empirical papers published between 2008 and 2019 from various countries across continents. The research, we devided into 4 major groups based on continents namely Africa, Europe, Asia and Autralia as well as Latin America and Canada. The majority of them concluded that accounting information is more relevant across continents after IFRS adoption, while few hold the opposite view. Few studies show no evidence in the improvement of accounting information after IFRS adoption.
Value relevance to koncepcja, wedle której wartości księgowe oddziałują na rynkową wycenę spółki, kurs akcji czy ich stopy zwrotu w kolejnych okresach. Większość badań przeprowadzanych w tym zakresie opiera się na danych panelowych, syntetycznie ujmując tendencje obserwowalne dla grupy spółek. W przypadku analiz przeprowadzonych na przykładzie polskiego rynku kapitałowego wyróżnić można kilka odnoszących się do empirycznego wpływu zysków i danych bilansowych na zmienne rynkowe, a także do wpływu wprowadzenia nowych regulacji w zakresie rachunkowości na stopień value relevance. Badania zazwyczaj pomijają przedsiębiorstwa z sektora finansowego, jednakże wyróżnić można także takie, które skupiają się na określonej grupie podmiotów, takich jak banki czy zakłady ubezpieczeń. W artykule pod uwagę wzięto właśnie ostatnią z wymienionych grup. Niemniej zaprezentowano w nim odmienne podejście niż w większości badań empirycznych – skupiono się na danych finansowych jednej spółki z sektora ubezpieczeń: PZU S.A. Analizę przeprowadzono z wykorzystaniem modeli regresji liniowej, stosując modele oparte na MNK i metodę Praisa-Winstena. Wykorzystano dane finansowe pochodzące z raportów kwartalnych, półrocznych i rocznych z lat 2009–2019. Wyniki badania wskazują na objaśnianie kursów akcji w przyszłości szczególnie przez dane bilansowe, przede wszystkim aktywa i rezerwy techniczno-ubezpieczeniowe, a także przez operacyjne przepływy pieniężne, wynik techniczny i składkę na udziale własnym. Przedstawiono kilka modeli, które można uznać za użyteczne, biorąc pod uwagę ich poprawność pod względem statystycznym i zgodność oszacowań parametrów z założeniami teoretycznymi. Rezultat ten wskazuje również na celowość badań w koncepcji value relevance w odniesieniu do indywidualnych podmiotów.
