Development of Accounting in Poland: Market Efficiency and the Value Relevance of Reported Earnings
27 Pages Posted: 16 Jan 2008 Last revised: 23 Jan 2011
Date Written: February 12, 2010
This paper outlines the evolution of the information environment surrounding the Warsaw Stock Exchange in Poland. Like other transition economies, Poland’s economy needed to develop accounting regulations to support privatization. We trace changes in financial reporting regulation from 1994, through the adoption of IFRS and corporate governance codes, to the crisis of 2007/2008. The effect of these developments is then evaluated empirically by testing the relevance of earnings of listed corporations from 1997 to 2008 to corporate value. We show that the stock exchange was weak-form efficient during this period and estimate regressions for value relevance of earnings to corporate value. We find positive evidence of such relevance but find no improvement in the strength of the relationship over time.
Keywords: transition economy, information content, value relevance, Poland
JEL Classification: G12, M41, M47, K22, G38
Suggested Citation: Suggested Citation