Listed Dutch firms are required by law to prepare their financial statements in accordance with the International financial Statements (IFRS) since 2005. Before 2005, listed Dutch firms prepared their financial statements using Dutch law, Title 9 of book two of the Dutch Civil Code. It is interesting to investigate the effect of the implementation of IFRS. Is the quality of the financial statements improved by the implementation of IFRS for the users of the financial statements, such as investors, suppliers and banks?
This question can be answered in many ways, looking at different characteristics of the accounting information, for example the comparability, the relevance, the reliability and the understandability. In this thesis the relevance will be studied. Information has the quality of relevance when it influences the economic decisions of users by helping them evaluate past, present or future events or conforming, or correcting, their past evaluations. (IFRS Handbook, 2007, p. 40) In order to be relevant the accounting information must reflect the information needs of the users in valuing a company. In order to determine the market price of a company, investors need accounting information that reflects the share price of a company. The research done studying the relevance of accounting information for valuating companies is called value-relevance research.
The implementation of IFRS had consequences for the value-relevance of the accounting information. Whether the value-relevance had improved by the adoption of IFRS is dependent on the differences between the former accounting system and IFRS. The impact on value relevance in the Netherlands has not been studied yet. The impact on value-relevance in other countries has been studied however, for example in the United Kingdom (Harris and Muller, 1999), Germany (Hung and Subramanyam, 2007) and Spain Callao et al. (2007). These studies can give a powerful insight in how the difference in value-relevance of two accounting systems can be studied.
Table of contents
Preface
1. Introduction
2. The value-relevance of IFRS
2.1 Relevance defined
2.2 Differences between Dutch GAAP and IFRS
2.3 Value-relevance studies
2.3.1 The link between accounting information and the firm value: the Ohlson (1995) model
2.3.2 Implementation of the Ohlson model in value-relevance studies
2.4 The value-relevance of IFRS studies
2.4.1 Analysis of value-relevance of IFRS studies
2.4.2 Implications for the IFRS – Dutch GAAP value-relevance comparison
3. Research framework and sample selection
3.1 Research Framework
3.1.1 Incremental value-relevance of IFRS
3.1.2 Relative value-relevance of IFRS
3.2 Data collection
4. Empirical results
4.1 Incremental value-relevance of IFRS
4.2 Relative value relevance of IFRS
5. Conclusion
5.1 Conclusion
5.2 Limitations of this study
5.3 Recommendations for further research
Reverences
Appendix
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