Study on Increasing Value Relevance of Accounting Information by IFRS. The Case of the Romanian Companies Listed at Stock Exchange
Author:
Mihaela Alina ROBU, Ph.D. Student
JEL:
C13, C58, G14, M41
DOI:
Keywords:
investors, value relevance, financial information, multiple regression analysis, ANCOVA models
Abstract:
In their decision making process, investors need relevant and pertinent information. Due to the financial crisis, investors seek new instruments and techniques which can indicate the stock characterized by a higher return under the conditions of a priori established risk. The unfavorable economic conditions, marked by economic and financial crisis, financial fraud and circumvention of applying the recognized international accounting standards, investor confidence in the information of the financial statements of the companies has suffered. Can the mandatory adoption of International Financial Reporting Standards (IFRS), in Romania, by all the companies listed on the regulated market, Bucharest Stock Exchange (BSE), be considered the answer to the investors’ problem? Can IFRS provide valuable financial information? Based on the previously identified problem, the purpose of this study is to analyze if the accounting numbers obtained according to IFRS are more value relevant than the ones obtained according to Romanian Accounting Standards (RAS) and which type of companies can offer high stock performance. To achieve the purpose of the research, the target population consists of companies listed on BSE before and after the adoption of IFRS, during the financial crisis. From the target population, a sample of 59 companies listed on BSE was selected. These companies are characterized by various sizes and different activity fields. Data processing was performed using multiple regression analysis and ANCOVA models. Data for the analysis was collected from the financial statements of companies and from information provided by BSE. As statistical software, SPSS 20.0 was used. The research results reflect the increase in value relevance in the case of IFRS adoption. The IFRS adoption seems to be different when taking into consideration the activity field of the company. The results of this study may be useful to investors in obtaining tools that may contribute in the decisions making process.\r\n\r\n