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

Keryn Chalmers, Greg Clinch and Jayne M Godfrey

Australian Journal of Management, 2011, vol. 36, issue 2, 151-173

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. JEL Classification: M40, M41

Keywords: Accounting information; IFRS; value relevance (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (21)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:36:y:2011:i:2:p:151-173

DOI: 10.1177/0312896211404571

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