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Assessing the Value Relevance of Accounting Data After the Introduction of IFRS in Europe

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  • Devalle, Alain
  • Magarini, Riccardo
  • Onali, Enrico

Abstract

European listed companies are required to prepare their consolidated financial statements in accordance to IFRS since 1st January 2005. IFRS are supposed lead to better accounting quality and to a closer association between market-based and accounting-based performance, or value relevance. We examine whether value relevance has improved after the compulsory adoption of IFRS using a sample of 3,721 companies listed on five European stock exchanges: Frankfurt, Madrid, Paris, London and Milan. We find little evidence of an improvement in value relevance. However, earnings are found to influence share price to a greater extent than prior to IFRS adoption, while the influence of the book value of equity is found to have decreased.

Suggested Citation

  • 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.
    • Handle: RePEc:pra:mprapa:56174
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    References listed on IDEAS

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    More about this item

    Keywords

    value relevance; IFRS; Europe;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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