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

Listed author(s):
  • Keryn Chalmers


  • Greg Clinch
  • Jayne M Godfrey
Registered author(s):

    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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    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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