The impact of mandatory IFRS adoption on the earnings–returns relation
2013; Chapman and Hall London; Volume: 23; Issue: 13 Linguagem: Inglês
10.1080/09603107.2013.797557
ISSN1466-4305
Autores Tópico(s)Financial Markets and Investment Strategies
ResumoThis study investigates the impact of mandatory International Financial Reporting Standards (IFRS) adoption on the value relevance of financial reports in 13 European countries by comparing the earnings–returns relation pre- and post-IFRS mandatory adoption in 2005. It shows that the financial reporting convergence enhances the contemporaneous association between earnings and returns, consistent with investors' expecting net information quality benefits from the IFRS adoption. While the reduction of price leading return effects documented in Ali and Hwang (2000 Ali, A. and Hwang, L. 2000. Country-specific factors related to financial reporting and the value relevance of accounting data. Journal of Accounting Research, 38: 1–21. [Crossref], [Web of Science ®] , [Google Scholar]) is more pronounced for a country with less discrepancy between local generally accepted accounting principles and IFRS, the legal system and aggregate earnings management within that country do not significantly deteriorate the positive value-relevance reaction to mandatory IFRS adoption in Europe.
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