Changes in Value Relevance of Financial Information Upon IFRS Adoption: Evidence from Australia

38 Pages Posted: 20 Jan 2009 Last revised: 22 Sep 2011

See all articles by Keryn Chalmers

Keryn Chalmers

Monash University - Department of Accounting

Greg Clinch

Independent

Jayne M. Godfrey

University of Auckland

Date Written: October 1, 2010

Abstract

We investigate whether the adoption of IFRS increases the value relevance of accounting information for firms listed on the Australian Securities Exchange. Using a longitudinal study that covers pre-IFRS and post-IFRS periods during 1990-2008, we find that the combined relevance of book value of equity and earnings alters little with IFRS adoption. However, earnings become more value relevant whereas the book value of equity does not. This impact is concentrated in the sub-samples of large firms and firms that reported accounting information differences upon IFRS adoption. Consistent with an increase in the value relevance of earnings, earnings also become more persistent around IFRS adoption. Our study suggests that even for a country categorised by strong investor protection and high quality financial reporting and enforcement, IFRS adoption affects the associations between accounting information and market value.

Keywords: Accounting information, IFRS, Value relevance

JEL Classification: M40, M41

Suggested Citation

Chalmers, Keryn and Clinch, Greg and Godfrey, Jayne M., Changes in Value Relevance of Financial Information Upon IFRS Adoption: Evidence from Australia (October 1, 2010). Australian Journal of Management, Vol. 36, No. 2, 2011. Available at SSRN: https://ssrn.com/abstract=1326666

Keryn Chalmers

Monash University - Department of Accounting ( email )

900 Dandenong Road
Caulfield East, Victoria 3145
Australia
+61-3-9903-2867 (Phone)
+61-3-9903-2422 (Fax)

Greg Clinch (Contact Author)

Independent

No Address Available

Jayne M. Godfrey

University of Auckland ( email )

12 Grafton Road
Auckland, 1010
New Zealand

Register to save articles to
your library

Register

Paper statistics

Downloads
559
Abstract Views
2,033
rank
48,529
PlumX Metrics