The Impact of IFRS Adoption on the Quality of Consolidated Financial Reporting

摘要

In the majority of cases (at least on the large European stock markets) listed companies own one or more subsidiaries and therefore are obligated to a dual reporting, being required to produce two sets of financial statements – one at individual level, the other at group level. Furthermore, as of 2005, companies listed on the European stock markets had to adopt IFRS for the preparation of their group accounts, thus needing also to apply different accounting regulations: IFRS for the group accounts and European directives for individual accounts. This study investigates through an empirical association study the impact of the mandatory adoption of IFRS starting with 2005 on the absolute and relative quality (measured through value relevance) of financial information supplied by the consolidated accounts for companies listed on the largest European stock markets (London, Paris, and Frankfurt stock exchanges). The results show an increase of consolidated statements quality (value relevance) once IFRS were adopted, thus suggesting also that the IFRS adoption in Europe led to better complying with the OECD Corporate Governance Principle of high quality disclosure and transparency. Moreover, we ascertained an increase in the quality surplus supplied by group accounts compared to parent company individual accounts once the IFRS adoption became mandatory for preparing consolidated financial statements.