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Disclosure incentives, mandatory standards and firm communication in the IFRS adoption setting

Marvin Wee, Ann Tarca and Millicent Chang

Australian Journal of Management, 2014, vol. 39, issue 2, 265-291

Abstract: We investigate the content, timing and relevance of firms’ narrative disclosure about the effects of IFRS adoption in annual statutory financial statements and firm announcements to the stock exchange for 150 large listed Australian firms in the three-year period surrounding adoption (which occurred from 1 January 2005). We observe communication about changes in financial reports, even when the change relates to accounting rather than economic events. We record more disclosure by firms experiencing an adverse change in earnings, consistent with them being sensitive to signals about future earnings. When economic performance is stronger, firms provide less discussion of the accounting effects of IFRS. We also find the discussion of IFRS impact in both disclosure channels is value–relevant for firms with relatively higher levels of disclosure, providing evidence of the usefulness of transition disclosures.

Keywords: AASB 1047; AASB 101; continuous disclosure regime; International Financial Reporting Standards (IFRS); transition reconciliation; value-relevance (search for similar items in EconPapers)
JEL-codes: M40 M41 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:39:y:2014:i:2:p:265-291

DOI: 10.1177/0312896213481366

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