Dual Relationship: Mandatory Adoption of IFRS or Value Relevance of Accounting Information

Abstract

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International accounting standards, which are regarded as high quality standards, result in high quality accounting information. The concept of the quality of accounting information being a multidimensional concept we have decided to refer to a particular attribute which is value relevance. The objective of our research is to study the relationship between value relevance and the mandatory adoption of IFRS. In order to study this relationship, we have referred to a context where the vision of accounting is different from the Anglo-Saxon vision, so the French context seemed to us to be the most relevant. We specifically referred to the SBF 120 companies that we examined over two time periods: from 2003 to 2004 and from 2005 to 2008. In order to assess the level of relevance, we referred to the Ohlson (1995) model, which establishes the relationship between the stock price of shares and the book value of equity. After an empirical analysis, we concluded that the transition to international accounting standards has led to more relevant accounting information. Our research thus proves that the transition to international accounting standards has been beneficial.

Keywords: IFRS, Quality, Accounting Information, Value Relevance

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