Abstract

In this study, we examine the effect of adopting IFRS standards on the value relevance of accounting information. More specifically, we examine the difference of the combined value relevance of book value and net income between before and after adopting IFRS. Using the empirical form of Ohlson model and a sample of 47 firms adopting IFRS earlier than others from 2009.1Q to 2010.2Q, we regress stock price on both book value and net income. As we measure the value relevance as the explanatory power of book value and net income for market values, so higher explanatory power is interpreted as evidence of more value relevance. Our results are summarized as follows. First, there is little evidence suggesting that accounting numbers under IFRS are more value relevant than under K－GAAP. Second, comprehensive income have no incremental value relevance beyond net income. Third, as the periods of postadoption IFRS are longer(that is, more accounting information under IFRS), the value relevance of accounting measures under IFRS has improved. Fourth, comparing the value relevance for firms early adopting IFRS and non－adopting firms cross－sectionally, we find accounting numbers of firms adopting IFRS are more value relevant than all of others. Consequently, accounting information applying IFRS is not fully reflected in the investors'decision making, but it is possible that usefulness of IFRS can be improved as more information is disclosed and mandatory adoption IFRS is implemented.

Keywords

• K－IFRS
• the usefulness of financial statements
• the value relevance
• firms early adopting K－IFRS

Related Articles

• The Effects of K－IFRS Adoption upon the Value Relevance of Accounting Information

  Yang-Boo Kim

  19(6) 89-115

  Abstract Full Text for PDF

• The13)Value Relevance of Other Operating Income Items and an Operating Income Disclosure－Type under IFRS Adoption

  Seong Jin Lee

  17(3) 127-156

  Abstract Full Text for PDF

• The Effects of the Application of the IFRS 9 Expected Credit Loss Model：Focusing on Abnormal Loan Loss Provisions and Value Relevance of Bank

  Seung Uk Choi

  26(6) 43-86

  Abstract Full Text for PDF

• The Value Relevance of R&D Expenditures in Biotechnology Special Listing Firms

  Hyun Ah Kim

  25(4) 77-102

  Abstract Full Text for PDF

• The Effect of Changes in Accounting Environment on Sales Classification of Related Party Transactions15)：Focusing on the Adoption of Articles 45－3 in the Inheritance Tax and Gift Tax Law

  Boyoung Kim

  24(3) 57-91

  Abstract Full Text for PDF