Market reaction to and valuation of IFRS reconciliation adjustments: first evidence from the UK

• 成果类型: Article
• 署名作者: Horton, Joanne; Serafeim, George
• 署名单位: University of London; London School Economics & Political Science; Harvard University
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-009-9108-5
• 发表日期: 2010
• 页码: 725-751
• 关键词: Bias

摘要

We investigate the market reaction to, and the value-relevance of, information contained in the mandatory transitional documents required by International Financial Reporting Standards 1 (2005). We find significant negative abnormal returns for firms reporting negative earnings reconciliation. Although the informational content of the positive earnings adjustments is value-relevant before disclosure, for negative earnings adjustments it is value-relevant only after disclosure. This finding is consistent with managers delaying the communication of bad news until IFRS compliance. A finer model shows that adjustments attributed to impairment of goodwill, share-based payments, and deferred taxes are incrementally value-relevant but that only the impairment of goodwill and deferred taxes reveal new information. Our results indicate that mandatory IFRS adoption alters investors' beliefs about stock prices.