How Markets Valuate and Response to IFRS Reconciliations Adjustments in Finland

49 Pages Posted: 13 Aug 2007

See all articles by Hannu J. Schadewitz

Hannu J. Schadewitz

Turku School of Economics at the University of Turku - Department of Accounting & Finance

Markku J. Vieru

University of Lapland - Faculty of Social Sciences, Multidimensional Tourism Institute

Date Written: August 8, 2007

Abstract

This study focuses on the value relevance and market responses of mandatory transition to International Financial Reporting Standards (IFRS), using samples of Finnish first-time IFRS adopters. The Finnish data is used since prior research findings suggest large differences between Finnish accounting standards (FAS) and IFRS. Some evidence of value relevance is found in IFRS adjustments on earnings but not with IFRS adjustments in shareholders' equity. Furthermore, only minor market responses on stock returns and no excess trading after the release of IFRS reconciliation adjustments are evidenced. This suggests that great deal of IFRS reconciliations, if relevant, were anticipated by investors.

Keywords: accounting disclosure, accounting standards, earnings quality, IFRS, valuation impacts, event study

JEL Classification: D82, G14, M41, M44, M47

Suggested Citation

Schadewitz, Hannu J. and Vieru, Markku, How Markets Valuate and Response to IFRS Reconciliations Adjustments in Finland (August 8, 2007). Available at SSRN: https://ssrn.com/abstract=1005601 or http://dx.doi.org/10.2139/ssrn.1005601

Hannu J. Schadewitz

Turku School of Economics at the University of Turku - Department of Accounting & Finance ( email )

Rehtorinpellonkatu 3
FIN-20500 Turku
Finland
+358 2 333 9321 (Phone)
+358 2 333 9350 (Fax)

HOME PAGE: http://www.utu.fi/en/people/hannu-schadewitz

Markku Vieru (Contact Author)

University of Lapland - Faculty of Social Sciences, Multidimensional Tourism Institute ( email )

P.O. Box 122
Rovaniemi FIN-96101
Finland
+358 400 377641 (Phone)
+358 16 341 2600 (Fax)

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