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

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  • Ali Alnodel

Abstract

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.

Suggested Citation

  • Ali Alnodel, 2018. "The Impact of IFRS Adoption on the Value Relevance of Accounting Information: Evidence from the Insurance Sector," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(4), pages 138-138, March.
    • Handle: RePEc:ibn:ijbmjn:v:13:y:2018:i:4:p:138
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    Cited by:

    1. Nurunnabi, Mohammad & Donker, Han & Jermakowicz, Eva K., 2022. "The impact of mandatory adoption of IFRS in Saudi Arabia," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 49(C).
    2. Taleb Alsarayreh & Mohammad Saleh Altarawneh & Ahmed Eltweri, 2022. "The Implication of IFRS Financial Instruments Disclosure on Value Relevance," JRFM, MDPI, vol. 15(10), pages 1-17, October.
    3. Abdulrahman Alomair & Alan Farley & Helen Hong Yang, 2022. "The impact of IFRS adoption on the value relevance of accounting information in Saudi Arabia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(2), pages 2839-2878, June.
    4. Omar M. Alhawtmeh, 2023. "The Impact of IFRS 17 on the Development of Accounting Measurement and Disclosure, in Addition to Improving the Quality of Financial Reports, Considering Compliance with the Requirements of IFRS 4—Jor," Sustainability, MDPI, vol. 15(11), pages 1-26, May.

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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