The effect of adopting IFRS on the relevance of information: The case of Moroccan companies listed on the Casablanca Stock Exchange
-
Author(s)Yassine OubahouLink to ORCID Index: https://orcid.org/0009-0009-9315-9849
,
Khalid El OuafaLink to ORCID Index: https://orcid.org/0009-0005-9955-0997
-
DOIhttp://dx.doi.org/10.21511/imfi.21(2).2024.32
-
Article InfoVolume 21 2024, Issue #2, pp. 389-399
- Cited by
- 306 Views
-
56 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Since the introduction of IFRS in the European context and various countries worldwide, several studies have examined the impact of this new approach to asset and liability valuation on financial ratios and company values. The present study attempts to determine whether accounting figures prepared in accordance with this new international accounting regime better reflect the market value of companies listed on the Moroccan market compared to those prepared under Moroccan accounting standards. Empirically, the study is based on association studies using the returns model and covers a sample of 27 companies listed on the Casablanca Stock Exchange for the period 2015–2020, i.e., 162 observations. The regression results show that accounting figures prepared according to IFRS standards better reflect stock market profitability than those prepared according to local standards, with the explanatory power increasing from 16.76% to 23.64% for the pre-IFRS period compared to the post-IFRS period. This means that by adopting IFRS standards, accounting values tend to be closer to stock market values, thus confirming the hypothesis that IFRS standards deliver a better information content of accounting figures.
- Keywords
-
JEL Classification (Paper profile tab)G14, M40, M41
-
References30
-
Tables9
-
Figures0
-
- Table 1. Viability tests for the estimated model (IFRS sample)
- Table 2. Viability tests for the estimated model (MAS sample)
- Table 3. Descriptive statistics (IFRS pre-adoption period)
- Table 4. Descriptive statistics (IFRS post-adoption period)
- Table 5. Correlation between share price and risk factors (IFRS pre-adoption period)
- Table 6. Correlation between share price and risk factors (post-IFRS period)
- Table 7. Fixed-effects model (IFRS pre-adoption period)
- Table 8. Fixed-effects model (post-IFRS period)
- Table 9. Summary of regression results
-
- Alali, F. A., & Foote, P. S. (2012). The value relevance of international financial reporting standards: Empirical evidence in an emerging market. The International Journal of Accounting, 47(1), 85-108.
- Alomair, A., Farley, A., & Yang, H. H. (2022). The impact of IFRS adoption on the value relevance of accounting information in Saudi Arabia. Accounting & Finance, 62(2), 2839-2878.
- Alsarayreh, T., Altarawneh, M. S., & Eltweri, A. (2022). The implication of IFRS financial instruments disclosure on value relevance. Journal of Risk and Financial Management, 15(10), 478.
- Barth, M. E., Landsman, W. R., Young, D., & Zhuang, Z. (2014). Relevance of differences between net income based on IFRS and domestic standards for European firms. Journal of Business Finance and Accounting, 43, 297-327.
- Bedia, D. D., & Shrivastava, K. (2020). A study assessing the impact of voluntary adoption of IFRS on the comparability and relevance of financial information of listed Indian companies. International Journal of Scientific & Technology Research, 9(01).
- Bhatia, M., & Mulenga, M. J. (2019). Pertinence de la valeur de l'information comptable: Étude comparative des banques indiennes du secteur public et privé [Value Relevance of Accounting Information: Comparative Study of Indian Public and Private Sector Banks]. International Journal of Indian Culture and Business Management, 18(1), 12. (In French).
- Boukari, M., & Richard, J. (2007). Les incidences comptables du passage des groupes français cotés aux IFRS, Comptabilité - Contrôle - Audit, 2007/3 [The accounting implications of the transition of listed French groups to IFRS, Accounting - Control - Audit, 2007/3] (Vol. 13, pp. 155-169). (In French).
- Chalmers, K., Clinch, G., & Godfrey, J. M. (2011). Changes in value relevance of accounting information upon IFRS adoption: Evidence from Australia. Australian Journal of Management, 36(2), 151-173.
- Chehade, S., & Procházka, D. (2023). Value relevance of accounting information in an emerging market: the case of IFRS adoption by non-financial listed firms in Saudi Arabia. Journal of Accounting in Emerging Economies, (ahead-of-print).
- Easton, P. D., & Harris, T. S. (1991). Earnings as an Explanatory Variable for Returns. Journal of Accounting and Economics, 29, 19-36.
- Gomes, L. R., & Costa, J. C. (2022). IFRS convergence and value relevance of accounting information: evidence from Indian financial reporting. International Journal of Business & Society, 23(3).
- Hung, M., & Subramanyam, K. R. (2007). Financial statement effects of adopting international accounting standards: the case of Germany. Review of Accounting Studies, 12(4), 623-657.
- Ibrahimi, M., & El Baghdadi, F. (2023). Pertinence de la valeur des informations comptables: Cas des sociétés marocaines cotées [Relevance of the value of accounting information: Case of listed Moroccan companies]. Recherche en Sciences de Gestion – Research in Management Sciences, 5, 219-241. (In French).
- Karğın, S. (2013). The Impact of IFRS on the Value Relevance of Accounting Information: Evidence from Turkish Firms. International Journal of Economics and Finance, 5(4).
- Kothari, S. (1992). Price-Earnings Regressions in the Presence of Prices Leading Earnings: Earnings Level versus Change Specification and Alternative Deflators. Journal of Accounting & Economics, 15, 173-202.
- Laouane, A., & Torra, M. (2021). L’impact de l’adoption des normes IFRS sur la pertinence informationnelle des indicateurs de performance financière des sociétés cotées à la BVC de Casablanca [The impact of the adoption of IFRS standards on the informational relevance of financial performance indicators of companies listed on the BVC of Casablanca]. International Journal of Accounting, Finance, Auditing, Management and Economics, 2(6), 100-119. (In French).
- Liu, G., & Sun, J. (2015). Did the mandatory adoption of IFRS affect the earnings quality of Canadian firms? Accounting Perspectives, 14(3), 250-275.
- Mnif, Y., & Znazen, O. (2023). Value relevance of compliance with IFRS 7: evidence from Canada. Journal of Applied Accounting Research.
- Ohlson, J. A. (1991). Earnings, Book Values, and Dividends in Security Valuation (Working Paper). Columbia University.
- Ohlson, J. A. (1995). Earnings, book values, and dividends in equity valuation. Contemporary Accounting Research, 11(2), 661-687.
- Oubahou, Y., & El Ouafa, K. (2022). L’effet de l’introduction des normes ifrs: analyse de la revue de litterature theorique et empirique [The effect of the introduction of IFRS standards: analysis of the theoretical and empirical literature review]. Revue du contrôle, de la comptabilité et de l’audit – Review of Control, Accounting and Audit, 6(3). (In French).
- Outa, E. R., Ozili, P., & Eisenberg, P. (2017). IFRS convergence and revisions: value relevance of accounting information from East Africa. Journal of Accounting in Emerging Economies, 7(3), 352-368.
- Robu, I.-B., Carp, M., Istrate, C., Popescu, C., & Robu, M.-A. (2017). The value relevance of financial information under the influence of country risks: The case of the Indian listed companies. Asian Journal of Business and Accounting, 15(2).
- Roca, F. (2021). The influence of mandatory adoption of IFRS in Argentina on value relevance of accounting information. Journal of Applied Economics, 24(1), 154-172.
- Saadi, T. (2010, May). Contenus informationnels du résultat net et des capitaux propres: quelle pertinence après l'introduction des normes IFRS : le cas de la France [Information content of net income and equity: what relevance after the introduction of IFRS standards: the case of France]. Quoted by Haoudi, K., & Aasri, R. (2016). Pertinence Informationnelle des Normes Comptables: Revue de Litterature des Analyses Comparatives avec le Referentiel IFRS [Information value of accounting standards: a literature review on comparative analysis with reference to IFRS]. Finance & Finance Internationale, 3. (In French).
- Salameh, E. (2013). L’impact des normes IFRS sur le contenu informationnel des états financiers des PME cotées dans le contexte français [The impact of IFRS standards on the information content of the financial statements of listed SMEs in the French context]. European Scientific Journal, 9(22). (In French).
- Sefsaf, R. (2012). Contribution à l'analyse de l'effet de l'adoption des IFRS sur la qualité des chiffres comptables [Contribution to the analysis of the effect of the adoption of IFRS on the quality of accounting figures] (Doctoral dissertation). University of Angers. (In French).
- Sharma, A., Kumar, S., & Singh, R. (2012). Value relevance of financial reporting and Its impact on stock prices: Evidence from India. South Asian Journal of Management, 19(2), 60.
- Suwardi, E. (2020). The Evolution in Value Relevance of Accounting Measures in Indonesia. Gadjah Mada International Journal of Business, 22(1), 49-73.
- Vardia, S., Kalra, N., & Soral, G. (2016). An impact of IFRS on the value relevance of financial statements: A study of selected Indian listed companies. Indian Journal of Accounting, XLVIII (2), 7-17.
-
Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan
Ashraf Mohammad Salem Alrjoub ,
Muhannad Akram Ahmad
doi: http://dx.doi.org/10.21511/imfi.14(3).2017.01
Investment Management and Financial Innovations Volume 14, 2017 Issue #3 pp. 4-14 Views: 2854 Downloads: 2081 TO CITE АНОТАЦІЯSeveral studies have examined the relationship between inventory management and firm performance. However, most of these studies ignore the impact of inventory types on the relationship. Moreover, the relationship is influenced by some factors such as cost of capital which has not been considered. This study examines the moderating effect of cost of capital on the relationship between inventory types and firm performance. The data of 48 firms for the period 2010-2016 which formed 279 firm-year observations were used in this study. With the use of Pearson correlation and panel Generalized Method of Moments (GMM) estimation, the findings show that inventory management with consideration of its types influence firm performance in the long term. In addition, it is also found that cost of capital moderates the relationship between inventory management and firm performance. However, the interaction between cost of capital and inventory types has different implications. It is suggested that firms should consider cost of capital when making decision on inventory types and align their inventory control to fit in to the changes in their business environment.
-
The impact of foreign ownership on corporate governance: evidence from an emerging market
Rawan Shubita , Moade Fawzi Shubita
doi: http://dx.doi.org/10.21511/imfi.16(2).2019.09
Investment Management and Financial Innovations Volume 16, 2019 Issue #2 pp. 101-115 Views: 2059 Downloads: 314 TO CITE АНОТАЦІЯThis research explores the influence of foreign ownership on non-financial public shareholding firms in the Amman Stock Exchange (ASE). The study involved an investigation into the connection between non-Jordanian ownership and the company growth opportunity, stock liquidity, leverage, dividend policy and business output. The results highlight that foreign ownership can provide improved corporate governance practices by playing a decisive role in increasing the growth opportunity and enhancing the firms’ market valuation, as measured by Tobin’s Q. Moreover, the findings indicate that companies with foreign board membership have better operating performance and higher firm value. The rewards were reaped by foreign investors based on their superior monitoring ability, which affects the decisions made and actions taken by management.
-
Does capital structure affect firm value in Vietnam?
Tien Dat Dang , Thi Van Trang Do
doi: http://dx.doi.org/10.21511/imfi.18(1).2021.03
Investment Management and Financial Innovations Volume 18, 2021 Issue #1 pp. 33-41 Views: 1970 Downloads: 1180 TO CITE АНОТАЦІЯThis study aims to examine whether the capital structure and several factors have significant influences on firm value in Vietnam. To achieve this objective, 435 non-financial listed companies have been selected from 2012 to 2019 on Vietnamese stock exchanges. Four groups of firms continue to be chosen from the total to investigate the differences in the outcomes among industries. The results altogether using the GMM method show that the impact of capital structure and other control variables on firm value is significant, yet different across industries: capital structure has a significant positive impact on firm value in the food and beverage industry, but has a significant negative effect on the value of the firm in wholesale trade and construction, as well as real estate industry, while has an insignificant influence on enterprise value considering all industries. Apart from the firm size, the impact of other control factors on firm value also indicates mixed results.
