Abstract

Until fiscal year 2006, individual financial statements of legal entity have had a role as main statements in statutory financial reporting system. Whereas, Consolidated financial statements of the economic entity have been released to investors one month later than individual financial statements, performed only complementary role in conveying financial information. The time difference in disclosure between two kinds of financial statements could be cause of overlooking the potential insolvency of subsidiary company, and could be reason for weakening usefulness of financial information. To solve these problems, the regular authority changed statutory disclosure rules for consolidated financial statements. That is, disclosure deadline for consolidated financial statements of firms having total assets over 2 trillion won was changed to the end of March from the end of April, and consolidated financial statements were given a role as primary financial statements in the statutory financial reporting system. This study examines empirically the effect of changes in statutory disclosure rules of consolidated financial statements, such as shortening the statutory disclosure deadline and becoming the primary financial statement, on the value relevance of the information. We performed empirical tests using the simplified form of Ohlson model(Ohlson 1995) and 733 firm－year sample firms with consolidated financial statements from 2007 to 2008. We find that the change of disclosure rules for consolidated financial statements including the shortening of disclosure deadline and becoming primary financial statement significantly increase the value relevance of the statements. This study provides appropriateness of K－IFRS, adopting consolidated financial statements as a primary financial statements, by confirming political feasibility of regulatory authority's action regarding disclosure rules.

Keywords

• Consolidated financial statements
• Change the disclosure rules
• Statutory disclosure deadline
• Value relevance

Related Articles

• The Effect of Change of Consolidated Financial Statements Disclosure on Value Relevance

  Seok, Myung Bok , Hyun Mi, Ji

  11(1) 67-95

  Abstract Full Text for PDF

• The20)Effect of Mandatory Adoption of K－IFRS on Relative Value Relevance of EPS －An Comparative Analysis of Consolidated, Separate, and Individual Financial Statements－

  Sung-Ho Choi

  17(3) 89-126

  Abstract Full Text for PDF

• Comparing the Relative Value Relevance of Operation Income between Consolidated and Separate Financial Statements under K－IFRS

  Jong-Il Park

  16(3) 9-43

  Abstract Full Text for PDF

• Comparison Analysis of Value Relevance between Consolidated and Separate Financial Statement in accordance with the Adoption of IFRS

  Hyuk－Jin Kwon , Kim , Dong-Hoon Yang , Dong-Hoon Yang , Cho , Kwanghee

  15(5) 195-218

  Abstract Full Text for PDF

• IFRS Adoption and Value Relevance of Accounting Information

  JEONGTAEBEOM

  15(1) 163-187

  Abstract Full Text for PDF