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Value-Relevance of Biological Assets under IFRS


  • Rute Gonçalves

    () (School of Economics and Management, University of Porto)

  • Patrícia Lopes

    () (School of Economics and Management, University of Porto)


Using 389 firm-year observations of listed firms worldwide in 27 countries that adopted International Financial Reporting Standards (IFRS) until 2010, for the period 2011-2013, the purpose of this paper is to examine the value-relevance of fair value accounting of biological assets. In order to operationalize it as the book value’s ability to explain market equity value, this study adjusts the Ohlson model. The results support that recognized biological assets are value-relevant. After including the effect of the disclosure level of biological assets, the results show that biological assets are more value-relevant in firms that exhibit higher disclosure levels. Repeating this last analysis according to the classification bearer and consumable biological assets, the results are the same for bearer biological assets. For consumable biological assets, it seems that investors do not value recognized biological assets in firms that exhibit higher disclosure levels. Given the current adjustment in the International Accounting Standard 41 - Agriculture, under which firms will be permitted to choose either the cost or the revaluation models for mature bearer plants for annual periods beginning on or after 1 January 2016, this paper seeks to help standard setters to better understand the market valuation implications of this standard.

Suggested Citation

  • Rute Gonçalves & Patrícia Lopes, 2015. "Value-Relevance of Biological Assets under IFRS," FEP Working Papers 556, Universidade do Porto, Faculdade de Economia do Porto.
  • Handle: RePEc:por:fepwps:556

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    References listed on IDEAS

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    11. Khaled Al Jifri & David Citron, 2009. "The Value-Relevance of Financial Statement Recognition versus Note Disclosure: Evidence from Goodwill Accounting," European Accounting Review, Taylor & Francis Journals, vol. 18(1), pages 123-140.
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    Cited by:

    1. De George, Emmanuel T. & Li, Xi & Shivakumar, Lakshmanan, 2016. "A review of the IFRS adoption literature," LSE Research Online Documents on Economics 67599, London School of Economics and Political Science, LSE Library.
    2. Emmanuel T. De George & Xi Li & Lakshmanan Shivakumar, 2016. "A review of the IFRS adoption literature," Review of Accounting Studies, Springer, vol. 21(3), pages 898-1004, September.

    More about this item


    biological assets; fair value accounting; financial reporting; disclosure index; regulation;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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