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Do IFRS provide better information about intangibles in Europe?


  • Jean-Michel Sahut
  • Sandrine Boulerne
  • Frédéric Teulon


Purpose - The purpose of this paper is to study the information content of intangible assets under IAS/IFRS when compared to local GAAP for European listed companies. Design/methodology/approach - The paper employs multivariate regression models for a sample of 1,855 European listed firms in a six-year period, from 2002 to 2004 in local GAAP and from 2005 to 2007 in IAS/IFRS to investigate the empirical relationships between market value of European firms and book value of their intangible assets. Findings - The results suggest that the book value of other intangible assets of European listed firms is higher under IFRS than local GAAP and has more informative value for explaining the price of the share and stock market returns. European investors, however, consider the financial information conveyed by capitalized goodwill to be less relevant under IFRS than with local GAAP. Thus, identified intangible assets capitalized on European company balance sheets provide more value-relevant information for shareholders than unidentified intangible assets that have been transferred into goodwill, with the exception of Italian and Finnish investors. Originality/value - The paper adds to the existing literature on IFRS by documenting the association between the market value of European listed firms and the book value of their goodwill and other intangibles assets. The study complements prior studies by demonstrating that country differences persist despite the use of common accounting standards and that legal and regulatory country characteristics as well as market forces could still have a significant impact on the value relevance of accounting data.

Suggested Citation

  • Jean-Michel Sahut & Sandrine Boulerne & Frédéric Teulon, 2011. "Do IFRS provide better information about intangibles in Europe?," Review of Accounting and Finance, Emerald Group Publishing, vol. 10(3), pages 267-290, August.
  • Handle: RePEc:eme:rafpps:v:10:y:2011:i:3:p:267-290

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    References listed on IDEAS

    1. Tristan Boyer & Elena Chane-Alune, 2008. "IFRS and the Need for Non-Financial Information," LSF Research Working Paper Series 08-06, Luxembourg School of Finance, University of Luxembourg.
    2. Devalle, Alain & Magarini, Riccardo & Onali, Enrico, 2009. "Assessing the Value Relevance of Accounting Data After the Introduction of IFRS in Europe," MPRA Paper 56174, University Library of Munich, Germany, revised 08 Oct 2009.
    3. Anne Cazavan-Jeny, 2004. "Le ratio market-to-book et la reconnaissance des immatériels – une étude du marché français," Comptabilité - Contrôle - Audit, Association francophone de comptabilité, vol. 10(2), pages 99-124.
    4. Hervé Stolowy & Gaetan Breton, 2000. "A Framework for the Classification of Accounts Manipulations," Working Papers hal-00597249, HAL.
    5. Wolfgang Schultze, 2005. "The Information Content of Goodwill-Impairments under FAS 142: Implications for External Analysis and Internal Control," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 57(3), pages 276-297, July.
    6. Katherine Schipper, 2005. "The introduction of International Accounting Standards in Europe: Implications for international convergence," European Accounting Review, Taylor & Francis Journals, vol. 14(1), pages 101-126.
    7. repec:bla:joares:v:36:y:1998:i::p:161-191 is not listed on IDEAS
    8. Frédéric Teulon, 2014. "Ethics, moral philosophy and economics," Working Papers 2014-288, Department of Research, Ipag Business School.
    9. Gjerde, Øystein & Knivsflå, Kjell Henry & Sættem, Frode, 2008. "The Value-Relevance of Adopting IFRS: Evidence from 145 NGAAP Restatements," Discussion Papers 2008/21, Norwegian School of Economics, Department of Business and Management Science.
    10. repec:bla:joares:v:38:y:2000:i:2:p:375-386 is not listed on IDEAS
    11. Anne Cazavan-Jeny & Thomas Jeanjean, 2006. "The negative impact of R&D capitalization: A value relevance approach," European Accounting Review, Taylor & Francis Journals, vol. 15(1), pages 37-61.
    12. Naomi Soderstrom & Kevin Jialin Sun, 2007. "IFRS Adoption and Accounting Quality: A Review," European Accounting Review, Taylor & Francis Journals, vol. 16(4), pages 675-702.
    13. Rick Cuijpers & Willem Buijink, 2005. "Voluntary adoption of non-local GAAP in the European Union: A study of determinants and consequences," European Accounting Review, Taylor & Francis Journals, vol. 14(3), pages 487-524.
    14. Robert W. Holthausen, 2009. "Accounting Standards, Financial Reporting Outcomes, and Enforcement," Journal of Accounting Research, Wiley Blackwell, vol. 47(2), pages 447-458, May.
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    4. Cristina-Ionela Fădur & Marilena Mironiuc, 2012. "The Paradox Of Goodwill: Why Do We Pay More Than The Fair Value? Study On Romanian Companies," Anale. Seria Stiinte Economice. Timisoara, Faculty of Economics, Tibiscus University in Timisoara, vol. 0, pages 213-220, November.
    5. Catalina Gorgan & Vasile Gorgan, 2014. "Study On Disclosure Level Of Companies Listed On The Bucharest Stock Exchange In Accordance With International Financial Reporting Standards: The Case Of Intangible Assets," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 104-115, April.
    6. repec:ipg:wpaper:2014-532 is not listed on IDEAS
    7. George Emmanuel Iatridis & Daniel Senftlechner, 2014. "An Empirical Investigation of Goodwill in Austria: Evidence on Management Change and Cost of Capital," Australian Accounting Review, CPA Australia, vol. 24(2), pages 171-181, June.
    8. Walid Saleh, 2014. "Explaining the Cross-Sectional Patterns of UK Expected Stock Returns: The Effect of Intangibles," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 5(2), pages 160-170, April.
    9. Jean-michel Sahut & Medhi Mili & Sana Ben Tekaya & Frédéric Teulon, 2016. "Financial Impacts and antecedents of CSR: a PLS Path Modelling Approach," Economics Bulletin, AccessEcon, vol. 36(2), pages 736-751.


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