Changes in value relevance of accounting information upon IFRS adoption

Evidence from australia

Keryn Chalmers*, Greg Clinch, Jayne M. Godfrey

*Corresponding author for this work

Research output: Contribution to journalArticle

74 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)151-173
Number of pages23
JournalAustralian Journal of Management
Volume36
Issue number2
DOIs
Publication statusPublished - 1 Aug 2011
Externally publishedYes

Keywords

  • Accounting information
  • IFRS
  • value relevance

Fingerprint Dive into the research topics of 'Changes in value relevance of accounting information upon IFRS adoption: Evidence from australia'. Together they form a unique fingerprint.

Cite this