The impact of international financial reporting standards on the valuation of companies
International Journal of Development Research
The impact of international financial reporting standards on the valuation of companies
Received 14th August, 2021 Received in revised form 07th September, 2021 Accepted 05th October, 2021 Published online 30th November, 2021
Copyright © 2021, Patrícia Pereira Castro et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
This article studies the effect of the International Financial Reporting Standards - IFRS in the companies' valuation, checking especially, if there was difference in the realized prices between the pre-IFRS and post-IFRS period. Ascertain whether a new accounting standard theoretically superior in fact brought positive reflexes in practice is of utmost importance in the discussion between costs and benefits of adopting a new accounting disclosure practice. We study the relationship between realized accounting data and share prices of companies listed on B3 (old BM&FBOVESPA) extracted from Economática software, for the ex-ante and ex-post period the IFRS adoption (2001 to 2016) through the Residual Income Valuation - RIV and Abnormal Earnings Growth - AEG models. The results indicate that, in general, the IFRS did not bring greater market reaction with the adoption of IFRS, by the Akaike criterion (AIC) and the Bayesian Information Criterion (BIC). However, it is highlighted that the post-crisis 2008 effects, such as an increase in market uncertainty, may be influencing the results.
