اثر استانداردهای بین المللی گزارشگری مالی در حساب ها و کیفیت های حسابداری از شرکت های استرالیا: مطالعه گذشته نگر

We examine the effect of Australian equivalents to International Financial Reporting Standards (IFRS) on the accounts and accounting quality of 1,065 listed firms, relying on retrospective reconciliations between Australian Generally Accepted Accounting Principles (AGAAP) and IFRS. We find that IFRS increases total liabilities, decreases equity and more firms have earnings decreases than increases. IFRS earnings and equity are not more value relevant than AGAAP earnings and equity and while adjustments for changes in accounting for provisions and intangibles other than goodwill are value relevant, they weaken associations with market value. Goodwill adjustments improve associations with market value. We also find that the reconciliation note for the earnings adjustments contained no new information.

In 2002 the Financial Reporting Council (FRC) claimed that the implementation of Australian equivalents to International Financial Reporting Standards (IFRS) would enhance “the overall quality of financial reporting in Australia” (FRC, 2002). This view was supported by the Australian Accounting Standards Board (AASB) in suggesting that complying with IFRS would not impose significant burdens and costs on entities when compared with the benefits of more relevant and reliable information for users of financial reports (Fenton-Jones, 2003, 53). There was general agreement among commentators, the firms, analysts and the wider community that the introduction of IFRS from 2005 would materially affect Australian firms' financial performance and accounts quality (Buffini, 2005; Clarke and Dean, 2005, Deegan, 2005, 32–35).1 A study based on interviews of 60 senior financial executives from Australia's top 200 firms reported that the introduction of IFRS would have a significant impact on financial position and earnings. The majority of executives expected earnings to be negatively affected while less than half expected a positive effect on the financial position of their firms (Jones and Higgins, 2006). However, no substantial empirical study has been undertaken to assess the claim that financial statements prepared under IFRS will enhance the quality of financial reporting in Australia or to examine the effects of IFRS on financial performance. In this paper we use a representative sample of listed firms in attempting to fill this gap in the literature. Our study contributes to the current debate on whether IFRS based accounting numbers are of a different quality to those produced under domestic GAAP in several important ways. First, we examine all listed Australian firms that have available data. Second, the exemptions from applying IFRS to restated earnings and equity are limited to a small number of standards and all firms are required to restate and provide reconciliations from Australian Generally Accepted Accounting Principles (AGAAP) to IFRS upon first-time adoption of IFRS (AASB 1 First-Time Adoption of Australian Equivalents to International Financial Standards, para 39). 2 Prior studies use datasets that may not be representative of the full effects of IFRS due to small sample size (e.g., Hung and Subramanyam, 2007) or they may use firms that voluntarily adopt IFRS (e.g., Barth et al., 2005; Bartov et al., 2005), meaning control for self-selection bias is needed. Self-selection bias is not an issue with our dataset because early adoption is not permitted (AASB 1). Third, our large sample size permits an empirical examination of the reconciliation adjustments to IFRS, which has not been reported in the literature. Finally, examining the switch to IFRS for Australia is useful, as similar studies have focused on code law countries such as Germany. In Germany, accounting numbers are more conservative and have different value relevance than accounting numbers produced under common law based countries like Australia ( Ali and Hwang, 2000; Ball et al., 2000). IFRS is applicable for reporting periods beginning after 31 December 2004 and firms are required to restate comparatives and provide reconciliations to IFRS in their notes to the accounts in the first year of adoption. This requirement permits a research design that directly compares accounting numbers and their properties prepared under AGAAP with those under IFRS for the same set of firm-years, as firms provide earnings and equity amounts measured under two different sets of accounting standards for the same periods. Our investigation comprises two main parts. First, we document the effect of IFRS on key accounting numbers and ratios. Using a sample of 1,065 listed firms, we find that the mean (median) of total liabilities has increased and the mean (median) of total equity has fallen. Total assets and earnings are higher under IFRS but the changes are not significant apart from the increase in the half-year earnings median. IFRS increases the leverage ratio. Second, we examine the relative value relevance of IFRS earnings and equity and the incremental value relevance of IFRS over AGAAP. Using models with market prices and returns as dependent variables, we carry out our tests on annual earnings (net income) and equity measured at the changeover date to IFRS. We find no evidence that IFRS earnings and equity are more value relevant than AGAAP. We find weak evidence that the aggregate changes for earnings and equity are incrementally value relevant to AGAAP. About half of the reconciling adjustments to AGAAP are value relevant but are generally not timely. The intangibles and provisions' adjustments in particular weaken the association with market value. Goodwill adjustments improve the association with market value. Because our data is from retrospective reconciliations, the tests are only of the ability of accounting numbers to capture information used by the market. Therefore a coefficient's significance provides a lower bound on its ‘true’ significance. We are aware of two other similar papers, namely Rees and Elgers (1997) and Hung and Subramanyam (2007) that examine a retrospective dataset. In our final test we examine whether the earnings adjustments are associated with market values measured over the interval covering the release of the IFRS reconciliation note. This test permits inferences about the usefulness to investors of the reconciliation adjustments, as observing a significant coefficient in this regression could result from investors using that information. We find that all of the information in the earnings adjustments was impounded into prices before the release of the accounts, suggesting that the market was able to obtain the information from sources other than the reconciliation note. The remainder of this paper is organised as follows. The literature review is covered in the next section. Section 3 describes the institutional background and data collection process. Section 4 describes the accounting differences between AGAAP and IFRS for the major reconciliation adjustments and provides an examination of the effects of IFRS on the accounts and on financial statement elements and ratios. Section 5 covers methodology and results for relative value relevance tests and incremental value relevance is covered in section 6. Section 7 concludes the paper.

This paper provides evidence on the effects of IFRS on the accounts and accounting quality for a sample of 1,065 Australian listed firms. An important contribution of this study is that we use a dataset of firms that must apply IFRS, which means that self-selection bias does not impact the results. We also examine a common law based country, which differs from the code law based countries examined in most previous studies. We find that under IFRS, mean (median) liabilities increase; mean (median) equity decreases; there are more decreases to earnings than increases; and the leverage ratio increases. Unrealised gains on investment property and reversal of goodwill amortisation are the main drivers of earnings increases. Recognition of share-based payment expense is the most common item decreasing earnings. Impairment is an important cause of equity decreases. Write-downs of intangibles and reclassifications of equity to debt reduced equity substantially but those adjustments are not pervasive. No evidence is found that IFRS earnings and equity are of higher quality (more value relevant) than AGAAP earnings and equity, consistent with other studies comparing within country (Eccher and Healey, 2003; Hu, 2003; Bartov et al., 2005; Hung and Subramanyam, 2007). These results hold across subsamples of firm size, industry sector and profit- versus loss-making firms. We find an instance of higher value relevance of AGAAP for the financial industry. Our evidence is not consistent with the claim by the Financial Reporting Council that IFRS will enhance financial reporting quality. We also examine the incremental value relevance of the aggregate change and of adjustments in reconciliations from AGAAP earnings and equity to IFRS earnings and equity. Results show that in aggregate, the net changes to AGAAP earnings and book value are not associated with prices and there is weak evidence that the incremental earnings aggregate is timely. Both the earnings and equity adjustments for intangibles are negatively associated with price. This suggests that the change to IFRS accounting for intangibles is too conservative when compared with AGAAP. We also find that the provisions, investments and impairment adjustments are value relevant but not consistent with investors' perceptions. These adjustments are not timely however. We also find that the adjustment for share-based payment is timely, and is not consistent with the market's perception. We find no association of share-based payment with price. The goodwill component which comprises mainly amortisation reversal is positively associated with market price and returns, consistent with investors' perceptions of value changes for this asset. We also find that foreign exchange translation adjustments are negatively associated with market value, as do Louis (2003) and Pinto (2005). Tests using returns measured over the period that the accounts were released reveal that no information is contained in the earnings reconciliation note, suggesting that this note is not useful to investors. Apart from the usual limitations of studies such as ours, other limitations need to be noted. Our cross sectional tests use a dataset that is not fully IFRS compliant, namely the last year of AGAAP use. Tests on earnings and book value for the first year of IFRS use provide consistent evidence. Nevertheless inferences may change when more periods of IFRS are available. Relatedly, the first year of adoption of IFRS may increase incentives to engage in earnings management, which may have a consequential effect for value relevance. This is an interesting area for future research.