Title: The value relevance of earnings in Europe after IFRS implementation: why do national differences persist?

Authors: Andrei Filip; Bernard Raffournier

Addresses: ESSEC Business School, Av. Bernard Hirsch, B.P. 50105, 95021 Cergy, France ' University of Geneva, 40 bd du Pont d'Arve, 1211 Genève 4, Switzerland

Abstract: Since 2005, all European listed companies must comply with IFRS in the preparation of their consolidated financial statements. Several studies have investigated the consequences of this political decision, comparing various dimensions of accounting quality before and after IFRS implementation. But they do not really address the following question: will the adoption of a common set of accounting standards result in a standardisation of accounting quality throughout Europe, or will national differences persist due to the influence of local characteristics? In order to provide evidence on this issue, we measure the value relevance of accounting earnings in 16 European countries over the period 2006-2007. The results show that country differences persist despite the use of common accounting standards, which is consistent with the idea that legal and regulatory country characteristics as well as market forces still impact the association between market returns and accounting data.

Keywords: value relevance; IFRS; International Financial Reporting Standards; Europe; institutions; incentives; international accounting; earnings; national differences; market returns; accounting data.

DOI: 10.1504/IJAAPE.2013.057527

International Journal of Accounting, Auditing and Performance Evaluation, 2013 Vol.9 No.4, pp.388 - 415

Received: 26 Apr 2012
Accepted: 17 Mar 2013

Published online: 30 Jan 2014 *

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