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澳洲RMIT硕士金融会计专业英语论文高分案例Adoption of IFRS in the Netherlands: impact on value-relevance

澳洲RMIT硕士金融会计专业英语论文高分案例Adoption of IFRS in the Netherlands: impact on value-relevance
  • 国家 : 澳洲
  • 级别 : 硕士
  • 专业 :
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详细描述

Table of contents
Preface 2
Table of contents 3
1. Introduction 5
2. The value-relevance of IFRS 8
2.1 Relevance defined 8
2.2 Differences between Dutch GAAP and IFRS 8
2.3 Value-relevance studies 14
2.3 .1 The link between accounting information and the firm value: 14
the Ohlson (1995) model
2.3.2 Implementation of the Ohlson model in value-relevance studies 18
2.4 The value-relevance of IFRS studies 19
2.4.1 Analysis of value-relevance of IFRS studies 20
2.4.2 Implications for the IFRS – Dutch GAAP value-relevance comparison 28
3. Research framework and sample selection 30
3.1 Research framework 30
3.1.1 Incremental value-relevance of IFRS 30
3.1.2 Relative value-relevance of IFRS 33
3.2 Data collection 34
4. Empirical results 35
4.1 Incremental value-relevance of IFRS 35
4.2 Relative value-relevance of IFRS 39
5. Conclusion 41
5.1 Conclusion 41
5.2 Limitations of this study 43
5.3 Recommendations for further research 44
Adoption of IFRS in the Netherlands: impact on value-relevance
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Reverences 45
Appendix 48
Adoption of IFRS in the Netherlands: impact on value-relevance
5
1. Introduction
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 valuerelevance
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.
The main question that will be answered in this thesis is:
- Has the implementation of IFRS made accounting information more relevant in the
Netherlands?
Adoption of IFRS in the Netherlands: impact on value-relevance
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Before this question will be answered the already existing literature will be studied. Using the
already existing literature I will answer the following sub questions:
- How can relevance be defined?
- Has the adoption of IFRS influenced the accounting numbers in the Netherlands, and
if so, what are the main causes of this difference?
- How can accounting relevance be determined?
- How can the value-relevance of IFRS compared to Dutch GAAP be studied?
After the literature review I will conduct an empirical study to investigate what effect the
adoption of IFRS had on the value-relevance in the Netherlands. I will operationalize the main
question into the following empirical sub question:
- Which accounting system provides relative more value-relevant information; IFRS or
Dutch GAAP?
I will study whether a regression model based on IFRS book value and earnings or a model
based on Dutch GAAP book value and earnings provides more value-relevant information.
Before this regression analysis is conducted, it is interesting to study whether IFRS provides
relevant information that is not incorporated in Dutch GAAP. Therefore I will first test in the
empirical study the following sub question:
- Are the IFRS numbers able to provide value-relevant information beyond the
information that is provided by Dutch GAAP?
This would indicate that the IFRS numbers provide useful information that is not incorporated
in Dutch GAAP. I will measure the incremental value-relevance of IFRS using a regression
model which measures how well the accounting numbers are able to provide value-relevant
information of the Dutch firms listed on the AEX under IFRS and under Dutch GAAP.
IFRS is implemented in the Netherlands in 2005. According to IFRS one, companies who
adopt IFRS for the first time are required to prepare reconciliation statements. The
reconciliation statement encompasses the result, the opening value and the closing value of
the equity under the previous GAAP and under IFRS. Since Dutch firms were required by law
Adoption of IFRS in the Netherlands: impact on value-relevance
7
to adopt IFRS in 2005, the result of 2004 and the book value at the end of the year of 2004 are
presented in the reconciliation statement. This is the only time when the book value and the
earnings are both measured in Dutch GAAP and IFRS, so this study can only be done using
the annual statements of 2005. The study can not be repeated using newer numbers, because
after 2005 the Dutch GAAP numbers are not available.
The remainder of this thesis is organized as follows: In chapter two the literature will be
reviewed. The chapter will start by a discussion of how the relevance of accounting
information can be defined. Then I will discuss the differences between Dutch GAAP and
IFRS. After that I will explain the link between accounting information and the market value,
using the Ohslon (1995) model, and its implications for the value-relevance studies. Then I
will analyze 4 studies which compared the relevance of IFRS with another accounting system,
in order to develop a research framework. In chapter 3 the research framework and the sample
selection will be discussed. The results will be presented and discussed in chapter four,
followed by the conclusion, limitations and recommendations for further research in chapter
five.
Adoption of IFRS in the Netherlands: impact on value-relevance
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2. The value-relevance of IFRS
In this chapter the literature concerning value-relevance and IFRS will be discussed. I will
answer the following sub questions in this chapter:
- How can relevance be defined?
In paragraph 2.1 I will discuss how relevance is defined and what is meant by this term when
it is used in relevance studies.
- Has the adoption of IFRS influenced the accounting numbers in the Netherlands, and
if so, what are the main causes of this difference?
In paragraph 2.2 the differences between IFRS and Dutch GAAP will be discussed. I will also
analyze what the causes are for these differences and whether it can be expected that these
differences result in a higher value-relevance of the accounting numbers because of the
adoption of IFRS.
- How can accounting relevance be determined?
In paragraph 2.3 the determination of accounting relevance will be discussed. The paragraph
will start with a discussion of which accounting numbers are needed to valuate a company,
using the Ohlson (1995) model. In the second part of this paragraph I will discuss how the
Ohlson model is used in value-relevance studies.
- How can the value-relevance of IFRS compared to Dutch GAAP be studied?
In paragraph 2.4 I will discuss how the value-relevance of IFRS compared to Dutch GAAP
can be studied. I will analyze 4 studies which compared IFRS with another accounting
system, in order to build a framework for the value-relevance study of IFRS compared to
Dutch GAAP.
Adoption of IFRS in the Netherlands: impact on value-relevance
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2.1 Relevance defined
Before anything can be said about the relevance of IFRS or Dutch GAAP, relevance has to be
defined. When has accounting information the quality of relevance? As mentioned in the
introduction, according to the IASB accounting information is relevant 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) According to
the FASB (the standards board of the United States) accounting information is relevant when
it is capable of making a difference in a decision by helping users to form predictions about
past, present, and future events or to confirm or correct their expectations. (Scott, 2006, p. 75)
Scott also gives his own definition of relevant information: relevant information is
information about the firm’s future economic prospects, that is, its dividends, cash flows and
profitability. (Scott, 2006, p. 18)
The users of the financial statements, as mentioned by the IASB and FASB, are primarily
investors, because investors are the most interested in the cash flows, dividends and
profitability. The future economic prospects give the investors information whether the share
price of a company has the right value. Accounting information is useful for determining the
share price of a company, because the share price can be linked to the accounting information.
(Nichols and Wahlen, 2004)
According to Barth et al. (2001) value-relevance as used in the literature can be seen as the
operational variable of the term relevance. Value-relevance research studies the relationship
between the share price as dependent variable and accounting numbers as independent
variable. The accounting numbers are value-relevant if they are significantly related to the
dependent variable, the share price, because they contain relevant information in valuing
companies. (Beaver, 2002)
2.2 Differences between Dutch GAAP and IFRS
In paragraph 2.1 the term relevance was defined. Accounting information provides valuerelevant
information when it is significantly related to the share price. In this thesis the valuerelevance
of Dutch GAAP is compared to the value-relevance of IFRS. Before these two
accounting systems can be compared, I will take a closer look at these two accounting
systems in order to determine whether the adoption of IFRS in 2005 has influenced the
Adoption of IFRS in the Netherlands: impact on value-relevance
10
accounting numbers in the Netherlands, and if so, can we then expect that the implementation
made the accounting numbers more value-relevant?
This paragraph will start with a brief discussion of the history of IFRS and Dutch GAAP,
followed by an analysis of the differences between IFRS and Dutch GAAP, based on a study
of Vergoossen (2006)
The first legislation in the Netherlands on the form and contents of published financial
statements came with the Act of 10 September 1970 on the Annual Accounts of enterprises.
(Camfferman, 1995) The act was incorporated in civil code in 1975, and has been amended
twice, first by the fourth Directive of the European Union in 1983 and later by the seventh
Directive of the European Union in 1988. The relevant legislation is now contained in Title 9,
book 2 of the Dutch Civil Code. (Nobes and Parker, 2000)
Since 2005 all listed companies in the European Union are required to prepare their financial
statements in accordance with IFRS. It is also optional to prepare the financial statements in
accordance with IFRS if a firm is not listed on a capital market in the Netherlands. (Art. 2:362
lid 8 BW)
The IFRS are made by the International Accounting Standards Board (IASB). The IFRS
contains also the older International Accounting Standards (IAS) made by the International
Accounting Standards Committee (IASC). The IASC was founded in 1973 by ten accounting
bodies, including the Netherlands. The IASC became the IASB in 2001. Since then, all the
new standards are called IFRS instead of IAS. In 2003 the first IFRS, IFRS 1was completed.
Nowadays there are 29 standards made by IASC and 8 standards made by the IASB. The
IFRS are adopted by a lot of countries. Other counties, like the United States, have accounting
systems similar to those of IFRS. Figure 1 gives an overview of those counties who have
adopted IFRS
 

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