The effect of IFRS adoption on the value relevance of accounting information: evidence from South Korea

Past decade has witnessed several changes in the process of conduct of business activities across the world especially due to the wave of globalization. It has also made drastic changes in the process of financial reporting, in particular the continuing adoption of IFRS (International Financial Reporting Standards) worldwide. IFRS are high quality, understandable, enforceable and globally acceptable accounting standards issued by IASB (International Accounting Standard Board). Thus these are a set of international accounting standards stating how a particular type of transaction and other events should be reported in the financial statements. Thus IFRS are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. IFRS is becoming the global language of business with over 40% of the world adopting this as their standard for reporting. India also decided to converge to IFRS from 1st April 2016 in a phased manner, which in turn improves the financial statement comparability and transparency that helps to attract greater cross border investments. This paper focuses on the convergence of IFRS with Indian Accounting Standards, its utility, issues and challenges faced by the stakeholders. It also throws light to the ways through which problems can be addressed.

In many countries International Financial Reporting Standards (IFRS) have become part of the domestic law or common practice. Ukraine has also taken the first steps to the use of IFRS taking into account its national peculiarities. However, problems occur in the adaptation of international standards, which need to be solved. The proposed article is devoted to the research of specific problems arising during the implementation of IFRS in Ukraine. The author substantiates the expediency of implementing International Financial Reporting Standards in Ukraine, studies the prospects of using international standards in the national accounting practices and defines the principle of transformation as a priority. It determines the stages of IFRS implementation in Ukraine and the problems that arise on each of these stages. As a result, the study highlights the shortcomings of the national accounting system’s reform and ways of optimizing the process of IFRS implementation in Ukraine.

The purpose of this paper is to investigate whether a change in stock price synchronicity after IFRS adoption differs by industry characteristics. IFRS adoption was expected to improve earnings quality and comparability. Industry concentration and homogeneity are utilized as industry characteristics, which are known as determinants to earnings quality and comparability to examine IFRS adoption effect on the synchronicity.
Using Korean firms listed from 2006 to 2015, the author found that stock price synchronicity decreases after IFRS adoption. The reduction in synchronicity is larger for firms in a concentrated industry. However, the researcher didn’t find that incremental effect of homogeneity on synchronicity changes around IFRS adoption. These results remain unchanged after several robustness tests. The results imply that earnings quality after IFRS adoption improves, while comparability effect is not evident in the Korean market.
The paper has implications that co-movement of stock price decreases after IFRS adoption in that delivering firm-specific information to investors; in addition, the magnitude of impacts of IFRS adoption differs by the industry characteristics. The author extends prior studies about IFRS adoption effect on the capital market by providing that the effects need to be examined after considering the industry characteristics.