Munich Personal RePEc Archive

Assessing the Value Relevance of Accounting Data After the Introduction of IFRS in Europe

Devalle, Alain and Magarini, Riccardo and Onali, Enrico (2009): Assessing the Value Relevance of Accounting Data After the Introduction of IFRS in Europe. Published in: Journal of International Financial Management and Accounting , Vol. 21, No. 2 (2010): pp. 85-119.

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Abstract

European listed companies are required to prepare their consolidated financial statements in accordance to IFRS since 1st January 2005. IFRS are supposed lead to better accounting quality and to a closer association between market-based and accounting-based performance, or value relevance. We examine whether value relevance has improved after the compulsory adoption of IFRS using a sample of 3,721 companies listed on five European stock exchanges: Frankfurt, Madrid, Paris, London and Milan. We find little evidence of an improvement in value relevance. However, earnings are found to influence share price to a greater extent than prior to IFRS adoption, while the influence of the book value of equity is found to have decreased.

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