The Value and Credit Relevance of IFRS versus J-GAAP Accounting Information

This paper examines which accounting information -one is accounting information based on Japanese GAAP (JGAAP) and the other is those based on IFRS- better explains total market capitalizations of firms’ common stock and credit ratings issued by credit-rating agencies. Our results are as follows. First, both value and credit rating relevance of IFRS-based net income measures are statically significantly lower than those based on JGAAP. Second, IFRS-based net income measures incrementally lower the credit rating relevance of accounting information. These results suggest that both value and credit rating relevance of net income information of Japanese firms could become impaired by the adoption of IFRS.