Proceedings of the 8th International Conference on Research in Management and Economics
Year: 2023
DOI:
[PDF]
Changes in the value relevance of accounting information upon IFRS adoption: Evidence from South Africa
Prof. Dr. Edward Chamisa, Colin Charles Smith, Hamutyinei Harvey Pamburai, and Cader Abdul Abdulla
ABSTRACT:
South Africa adopted the International Financial Reporting Standards (IFRS) as domestic accounting standards effective for reporting periods beginning on or after 1 January 2005. This study uses the price model and a sample of firms listed on the Johannesburg Stock Exchange to compare the value relevance of accounting information during the pre-IFRS adoption period (2002-2004) and the post-IFRS adoption period (2006-2012). The pooled regression results show evidence of value relevance in the pre-IFRS period (2002-2004) but unexpectedly no significant result in the post-IFRS period (2006-2012). The post-IFRS period was further analyzed in pooled regressions covering the periods during the global financial crisis (2006-2008) and the period after the global financial crisis (2009-2012). The study finds no significance in value relevance during the crisis period (2006-2008) but significant increase in the value relevance of book values and earnings in the period after global financial crisis (2009-2012). Overall, the evidence (especially the yearly regression results) shows that accounting information was more value relevant during the post-IFRS period, especially the post global financial crisis period.
keywords: International Financial Reporting Standards, IFRS adoption, value relevance, price model, equity book value, earnings per share