Value relevance of financial information: A comparative study of pre- and post- implementation of Indian accounting standards
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Author(s)K. P. Venugopala RaoLink to ORCID Index: https://orcid.org/0000-0002-5183-4596
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Farha Ibrahim
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Mani Sree TadiLink to ORCID Index: https://orcid.org/0000-0001-7195-845X
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DOIhttp://dx.doi.org/10.21511/imfi.20(1).2023.07
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Article InfoVolume 20 2023, Issue #1, pp. 68-76
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In 2016, India implemented new accounting standards, Ind AS, aligning with IFRS to increase transparency in the financial reporting of Indian companies. This study examines the value relevance of financial information in India before and after the adoption of Indian accounting standards (Ind AS) by comparing the published financial statements in pre- and post-Ind AS periods and determines the influence of financial information on the market price of shares. The study period is for twelve years, from 2011 to 2022, divided into 2011–2016 (pre-Ind AS period) and 2017–2022 (post-Ind AS period). To evaluate the value relevance of financial information, the Ohlson pricing model is employed on the panel data of the blue-chip companies listed in the Nifty 50 Index. The results from the Least Squares regression reveal that the net cash from investing activities, profit-after-tax, and book-value-per-share were relevant for investment decisions prior to the adoption of the Ind AS. In contrast, the profit-after-tax had no explanatory power during the post-Ind AS period. However, the net cash from investing activities and the book-value-per-share significantly influenced the market price of equity since the implementation of Ind AS. The value relevance of the accounting statements was superior in the pre-Ind AS period compared to the post-Ind AS.
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JEL Classification (Paper profile tab)G14, G40, M41
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References39
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Tables6
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Figures0
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- Table 1. Descriptive statistics, pre-Ind AS (2011–2016)
- Table 2. Descriptive statistics, post-Ind AS (2017–2022)
- Table 3. Pearson correlation, pre-Ind AS (2011–2016)
- Table 4. Pearson correlation, post-Ind AS (2017–2022)
- Table 5. Regression, pre-Ind AS (2011–2016)
- Table 6. Regression, post-Ind AS (2017–2022)
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IFRS convergence: opportunities and challenges in India
Accounting and Financial Control Volume 1, 2017 Issue #2 pp. 13-18 Views: 3801 Downloads: 1718 TO CITEPast 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.
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Effects of financial statements information on firms’ value: evidence from Vietnamese listed firms
Dang Ngoc Hung ,
Pham Duc Cuong ,
Vu Thi Bich Ha
doi: http://dx.doi.org/10.21511/imfi.15(4).2018.17
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 210-218 Views: 2422 Downloads: 387 TO CITE АНОТАЦІЯThe paper studies the effects of information reporting in financial statements on values of Vietnamese firms. The study uses panel data with 1,070 observations from 214 firms, which are listed in the stock market of Vietnam in the period from 2012 to 2016. Multiple regression results show that the growth, firm size, profitability, auditing quality and timelineness are positively related to firm values, whereas the capital structure, auditing explanation negatively affect that indicator. The paper also indicates the inconsistency in measuring firms’ value by different measures including EV, Tobin’s Q or share price. Moreover, the research results reflect that measuring firms’ value by EV is more appropriate. The results of empirical research are instructive for enterprises to improve the usefulness of information in financial statements, thereby enhancing enterprises’ values.
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The effect of IFRS adoption on the value relevance of accounting information: evidence from South Korea
Investment Management and Financial Innovations Volume 16, 2019 Issue #2 pp. 78-88 Views: 1839 Downloads: 298 TO CITE АНОТАЦІЯThis study investigates whether the value relevance of accounting information was changed after IFRS adoption in South Korea. Related prior studies have found mixed empirical evidence depending on research methodologies or research periods. Moreover, the effect of IFRS adoption on value relevance can be different between Korean stock markets (KSE and KOSDAQ) because they have different characteristics. Also, the main financial statements reported by Korean firms had changed from individual financial statements to consolidated financial statements after IFRS adoption. Thus, this study analyzes the effect of IFRS adoption on the value relevance of individual and consolidated accounting numbers expanding research periods (5 years before and after IFRS adoption) and comparing changes in explanatory powers of Ohlson (1995) model on each listing market. The empirical results indicate that the value relevance of Korean listed firms generally decreased after IFRS adoption. However, the value relevance of KSE listed firms decreased, while the value relevance of KOSDAQ listed firms increased after IFRS adoption. In addition, it was found that the effects of IFRS adoption on value relevance of individual and consolidated financial information were different depending on listed markets. This implies that different level of demand for information environment may induce differential effects of IFRS adoption on value relevance.
