Effect of international financial reporting standards on financial information quality

Elisa García Jara, Amparo Cuadrado Ebrero and Rolando Eslava Zapata

Journal of Financial Reporting and Accounting, 2011, vol. 9, issue 2, 176-196

Abstract: Purpose - This paper aims to analyze the quality of financial information using financial and economic ratios, assessing if the quality is affected by financial reporting standards. A group of factors that allow proving of the capacity of ratios to measure accounting information quality – and thus facilitating the analysis process to the groups of users – is also determined. Design/methodology/approach - Using a sample of 111 companies from the Madrid Stock Exchange and 32 from Eurostoxx50, descriptive analysis and non‐parametric variance analysis were carried out during the period 2005‐2007. At the same time, reduction data techniques, specifically principal components analysis (PCA), were performed to detect the underlying main factors for the year 2007. Findings - There is an indication that financial information quality is affected by financial reporting standards. Additionally, there is a group of factors that show an alternative to analyze accounting information. Practical implications - This study provides evidence to measure financial information quality and the results can be beneficial to accounting users, as well as contributing to the literature related to this topic. Originality/value - Empirically, this study shows that accounting information is affected by financial reporting standards.

Keywords: Financial information quality; Ratios; Financial reporting standards; Accounting users; Kruskal‐Wallis test; Principal component analysis; Financial reporting; International standards (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrapp:v:9:y:2011:i:2:p:176-196

DOI: 10.1108/19852511111173121

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