*First-Time Adoption of IFRS, Managerial Incentives and Value-Relevance: Some French Evidence

Abstract

This paper investigates whether and how managerial incentives influence the decision to elect optional exemptions when first adopting International Financial Reporting Standards (IFRS). It also examines the value-relevance of the mandatory and optional equity adjustments that must be recognized as a result of the first-time adoption of IFRS. Both questions are addressed in the context of the mandatory adoption of IFRS by French firms in 2005. Three major findings emerge from our analyses. First, managerial incentives influence the decision to strategically elect one or more optional exemptions at the transition date. Second, mandatory equity adjustments are more valued than French GAAP equity, suggesting that the first-time adoption of IFRS by French firms is perceived as a signal of an increase in the quality of their financial statements. Third, the value-relevance of optional IFRS equity adjustments depends on whether they result in the disclosure of new information.

Assessing the value relevance of total comprehensive income under IFRS: an empirical evidence from European stock exchanges

“…In order to collect as much data as possible, we have not defined any truncation rule. The market value has been collected with respect to the third month after fiscal year end (as Cormier et al, 2009;Kanagaretnam et al, 2009;Oswald, 2008;Van der Meulen et al, 2007;Hellström, 2006;King and Langli, 1998).…”

Value relevance of accounting data and financial crisis in Europe: an empirical analysis

“…The total amount of financial statements analysed was 580, but a number of firms have been excluded because of the missing values. The market value has been collected with respect to the 3rd month after fiscal year end (as Cormier et al, 2009;Kanagaretnam et al, 2009;Oswald, 2008;Van der Meulen et al, 2007;Hellström, 2006;King and Langli, 1998).…”

Firm Life Cycle and the Value Relevance of Intangible Assets: The Impact of FRS 138 Adoption

“…These studies generally examine the effect of the change on accounting information value relevance and report mixed findings. For example, studies conducted in Greece [5], [6] and France [7] provide evidence that IFRS adoption leads to higher quality of financial statements as reflected in the more value relevant accounting measures. Reference [8], on the other hand, finds no support to conclude that financial statements prepared under IFRS in the U.K., Hong Kong and Singapore are incrementally value relevant to financial statements prepared under GAAP, while [9] report improved value relevance for book value but not earnings in Malaysia.…”