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

Alain Devalle, Riccardo Magarini and Enrico Onali

MPRA Paper from University Library of Munich, Germany

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.

Keywords: value relevance; IFRS; Europe (search for similar items in EconPapers)
JEL-codes: G15 (search for similar items in EconPapers)
Date: 2009-10-08, Revised 2009-10-08
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Citations: View citations in EconPapers (36)

Published in Journal of International Financial Management and Accounting 2.21(2010): pp. 85-119

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:56174

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