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Changes in value relevance of accounting information upon IFRS adoption: Evidence from Australia

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Author Info

  • Keryn Chalmers

    ()

  • Greg Clinch
  • Jayne M Godfrey
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    Abstract

    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 earnings become more value-relevant whereas the book value of equity does not. This impact is concentrated in the subsamples of industrial firms, both large and small, and firms reporting an AGAAP-IFRS accounting reconciliation upon IFRS adoption. Consistent with an increase in the value relevance of earnings, earnings also become more persistent around IFRS adoption. Our study suggests that even for a country categorized by strong investor protection and high-quality financial reporting and enforcement, IFRS adoption affects the associations between accounting information and market value.JEL Classification:M40, M41

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    File URL: http://aum.sagepub.com/content/36/2/151.abstract
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    Bibliographic Info

    Article provided by Australian School of Business in its journal Australian Journal of Management.

    Volume (Year): 36 (2011)
    Issue (Month): 2 (August)
    Pages: 151-173

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    Handle: RePEc:sae:ausman:v:36:y:2011:i:2:p:151-173

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    Web page: http://www.agsm.edu.au

    Related research

    Keywords: Accounting information; IFRS; value relevance;

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    Cited by:
    1. Ahmed, Kamran & Chalmers, Keryn & Khlif, Hichem, 2013. "A Meta-analysis of IFRS Adoption Effects," The International Journal of Accounting, Elsevier, vol. 48(2), pages 173-217.
    2. Shah, Syed Zulfiqar Ali & Liang, Shuang & Akbar, Saeed, 2013. "International Financial Reporting Standards and the value relevance of R&D expenditures: Pre and post IFRS analysis," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 158-169.

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