Value Relevance of Financial Reporting: In Pre IFRS, Post IFRS and Transition Regime

Abstract

The objective of this study is to test the influence of value relevance of accounting information (EPS, BV, CF, ROE) on the market share value of non-financial sector of Pakistan Stock Exchange (PSX) listed firms in the Pre & Post IFRS implementation period and transition regime. The study analyses the effectiveness of the quality measures of accounting information for the future prediction of market stock price and for investors to make better decisions for future investment. The targeted population of this study is the non-financial sector of PSX. The targeted sample is based on 41 non-financial public listed companies of PSX. The sample is based on those reported companies whose data is consecutively available for 18 years from 2001 to 2018. This study period has been chosen because this period covers the Pre and Post IFRS application period of Pakistan’s firms. The panel data and Ohlson (1995) price model are applied in the study. The findings conclude that the R-Square value of GLS analysis for post IFRS and Transition period is higher than pre-IFRS. It indicates that the Post IFRS application and transition regime periods indicate the quality measure of value relevant accounting information than the Pre IFRS application period. These both Post IFRS application period and transition regime show more valuable accounting measures for listed non-financial firms of PSX. This study concluded that the concurrent period of IFRS standards for non-financial listed firms impacts the value relevant accounting information to describe market share value.