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First-Time Adoption of IFRS, Managerial Incentives and Value- Relevance: Some French Evidence

Author

Listed:
  • Denis Cormier

    (CIFO - Chaire d?information financière et organisationnelle - ESG)

  • Samira Demaria

    (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique)

  • Pascale Lapointe-Antunes

    (CIFO - Chaire d?information financière et organisationnelle - ESG)

  • Robert Teller

    (CRIFP - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper investigates whether and how managerial incentives influence the decision to elect optional exemptions when first adopting International Financial Reporting Standards (IFRS). It also examines the value-relevance of the mandatory and optional equity adjustments that must be recognized as a result of the first-time adoption of IFRS. Both questions are addressed in the context of the mandatory adoption of IFRS by French firms in 2005. Three major findings emerge from our analyses. First, managerial incentives influence the decision to strategically elect one or more optional exemptions at the transition date. Second, mandatory equity adjustments are more valued than French GAAP equity, suggesting that the first-time adoption of IFRS by French firms is perceived as a signal of an increase in the quality of their financial statements. Third, the value-relevance of optional IFRS equity adjustments depends on whether they result in the disclosure of new information.

Suggested Citation

  • Denis Cormier & Samira Demaria & Pascale Lapointe-Antunes & Robert Teller, 2009. "First-Time Adoption of IFRS, Managerial Incentives and Value- Relevance: Some French Evidence," Post-Print halshs-00441336, HAL.
    • Handle: RePEc:hal:journl:halshs-00441336
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00441336
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    2. Valentin BURCA, 2014. "Implications of IFRS Adoption on Balance-Sheet vs Income Statement Figures," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 3, pages 33-42.
    3. William Bradford & Chao Chen & Song Zhu, 2017. "Conservative Accounting, IFRS Convergence and Cash Dividend Payments: Evidence from China," European Financial Management, European Financial Management Association, vol. 23(3), pages 376-414, June.
    4. Abdullah AL-Mutairi & Kamal Naser & Nabi Al-Duwaila, 2017. "Students' Attitudes towards the Adoption of International Financial Reporting Standards (IFRS) in Kuwait," Asian Social Science, Canadian Center of Science and Education, vol. 13(5), pages 1-85, May.
    5. Zhang, Yuyang & Uchida, Konari & Bu, Hua, 2013. "How do accounting standards and insiders' incentives affect earnings management? Evidence from China," Emerging Markets Review, Elsevier, vol. 16(C), pages 78-99.
    6. da Silva, Ricardo Luiz Menezes & Nardi, Paula Carolina Ciampaglia, 2017. "Full adoption of IFRSs in Brazil: Earnings quality and the cost of equity capital," Research in International Business and Finance, Elsevier, vol. 42(C), pages 1057-1073.
    7. Eva K. Jermakowicz & Robert D. Hayes, 2011. "Framework-Based Teaching of IFRS: The Case of Deutsche Bank," Accounting Education, Taylor & Francis Journals, vol. 20(4), pages 373-385, May.

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