The Adoption of IFRS in the UK

21 Pages Posted: 1 Oct 2008

See all articles by Mari Paananen

Mari Paananen

University of Hertfordshire

Nimita Parmar

University of Hertfordshire - Business School

Date Written: June 27, 2008


There are two approaches which investors can exercise when using accounting information, either to use financial reporting to value or to assess the management's stewardship of the company. Despite the fact that US GAAP, IFRS, and UK GAAP are all market oriented sets of accounting standards, both FASB and IASB are more inclined to require fair value accounting with regards to assets and liabilities compared to UK GAAP, which tend to encourage a stewardship approach. We examine whether investors' shift their focus from earnings to book value of shareholders' equity after the adoption of IFRS in the United Kingdom. As predicted we find that indeed investors seem to rely more on the book value of shareholders' equity and less on earnings information after the adoption of IFRS. We predicted and found no change in the overall increase accounting information's ability to predict future equity values.

Keywords: IFRS, stewardship, valuation, United Kingdom

JEL Classification: M41, M44, M47, G12

Suggested Citation

Paananen, Mari and Parmar, Nimita, The Adoption of IFRS in the UK (June 27, 2008). AAA 2009 Mid-Year International Accounting Section (IAS) Meeting, Available at SSRN: or

Mari Paananen (Contact Author)

University of Hertfordshire ( email )

Hertford Herts, SG13 8QF
United Kingdom

Nimita Parmar

University of Hertfordshire - Business School ( email )

College Lane
Hatfield, Hertfordshire Al10 9AB
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics