Value Relevance of IFRS Adoption in Emerging Countries

Download or read book Value Relevance of IFRS Adoption in Emerging Countries written by Aîcha Bleuler and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis investigates for three emerging countries from the Latin American region - Brazil, Mexico and Chile - the impact of IFRS adoption on accounting quality in terms of value relevance of earnings and book value of equity. Therefore, the institutional setting in Latin America is analyzed profoundly in order to identify country related factors potentially influencing accounting quality. Following, a sample period of four years was defined to examine empirically whether earnings and book value of equity are more value relevant after the mandatory adoption of IFRS in Brazil, Mexico and Chile (H1) and whether earnings and book value of equity are more value relevant under IFRS than under the domestic accounting standard (H2). The Brazilian sample consists of 136 firm year observations between 2008 and 2011, the Mexican sample consists of 128 firm year observations between 2010 and 2013 and the Chilean sample consists of 128 firm year observations between 2007 and 2010. The results obtained using the method of ordinary least square regression suggest that mandatory IFRS adoption increased the value relevance of earnings and book value of equity in Brazil, while for the Mexican and Chilean sample companies this could not be verified. In conclusion, the overall findings of this thesis show that countries from the same geographical region differ greatly with regards to their institutional framework and the effect of IFRS adoption on accounting quality was found to differ among countries in the Latin American area. This highlights the importance of country related institutional factors to be considered in the debate of accounting harmonization.