IFRS Convergence and Revisions: Value Relevance of Accounting Information from East Africa

Journal of Accounting in Emerging Economies, 7 (3), pp. 352-368, 2017

Posted: 18 Jun 2018 Last revised: 9 Sep 2018

See all articles by Erick Rading Outa

Erick Rading Outa


Peterson K Ozili

University of Essex - Essex Business School; Central Bank of Nigeria

Paul Eisenberg

University of Derby; University of Portsmouth

Date Written: 2017


Purpose – The purpose of this paper is to examine the relative value relevance of accounting information arising from the adoption of converged and revised International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) in East Africa.

Design/methodology/approach – The research applies “same firm year” design for identification of the effects of changes in accounting standards. A model similar to Ohlson’s price model and random-effects GLS are used to estimate R2 of the regressions of share prices on book values and earnings.

Findings – The results show that accounting information prepared from revised and converged IAS/IFRS display higher value relevance and also increased following the revision and convergence of IAS/IFRS. The cross-product term is more significant in the post-revision/convergence period thus providing further evidence for increased value relevance after the revision of IAS/IFRS. The results are robust to various models and show that value relevance in East Africa is relatively lower than that of the developed markets.

Originality/value – The current study provides empirical evidence that value relevance increases with converged/revised IAS/IFRS based on quasi natural experimental setting in East Africa. The authors also extend the debate on whether value relevance is relevant in emerging markets, which are regarded as imperfect markets with few regulations, weak enforcement and limited sources of information. The results may be useful to accounting preparers, regulators, investors, standard setters and countries seeking to adopt IAS/IFRS in developing countries.

Keywords: East Africa, Accounting Information, Value Relevance, Converged/Revised IFRS, IFRS/IAS, Ohlson Model

JEL Classification: M40, M41, O16, O55

Suggested Citation

Outa, Erick Rading and Ozili, Peterson Kitakogelu and Eisenberg, Paul, IFRS Convergence and Revisions: Value Relevance of Accounting Information from East Africa (2017). Journal of Accounting in Emerging Economies, 7 (3), pp. 352-368, 2017. Available at SSRN: https://ssrn.com/abstract=3189489

Erick Rading Outa

Independent ( email )

No Address Available

Peterson Kitakogelu Ozili

University of Essex - Essex Business School ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Central Bank of Nigeria ( email )

Plot 33, Abubakar Tafawa Balewa Way
Central Business District, Cadastral Zone

Paul Eisenberg (Contact Author)

University of Derby ( email )

Kedleston Road
Derby, Derbyshire DE22 1GB
United Kingdom

University of Portsmouth ( email )

University House
Winston Churchhill Avenue
Portsmouth, Hampshire PO1 2UP
United Kingdom

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