The effect of IFRS adoption on the value relevance of accounting information: the case of Colombian bank

Diana Milena Pacheco-Ortiz; Juan Fernando Rendón-García; Hernán Darío Villada-Medina

doi:10.24310/recta.22.2.2021.19882

Authors

Diana Milena Pacheco-Ortiz Instituto Tecnológico Metropolitano Colombia
Juan Fernando Rendón-García Instituto Tecnológico Metropolitano Colombia
Hernán Darío Villada-Medina Instituto Tecnológico Metropolitano Colombia

DOI:

https://doi.org/10.24310/recta.22.2.2021.19882

Keywords:

Book value, Colombian banks, earnings, IFRS, Ohlson's model, value relevance

Abstract

The value relevance of accounting information can be measured through statistical relationships between the information contained in the financial statements and stock market values or returns. In this paper, we compare the value relevance of the accounting information of eight banks listed on the Colombian Stock Exchange (BVC, for its acronym in Spanish) before and after the adoption of the International Financial Reporting Standards (IFRS). For this purpose, we use three monthly time series (book value of equity per share—representing the statement of financial position—, earnings per share—representing the comprehensive income statement—, and stock price per share) from January 2001 to December 2018. In addition, we apply panel data models based on Ohlson's model. The results show that accounting information has been relevant before and after IFRS adoption, which means that the implementation of IFRS has not increased its value relevance.

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