Accounting Standards and Market Value of Firms with Pension Plans

Sara Paralta

Abstract


This article investigates the impact of the adoption of International Accounting Standards on the market value of non-financial listed firms of the Euronext Lisbon Stock Exchange, in the PSI-20. The study of the impact of these standards is focused on the items of the Financial Statements, particularly on items subjected to the criteria of the fair value of assets and liabilities of pensions. Most of these companies have obligations to pay annuity benefits, particularly for retirement, which are managed by outsourced independent companies, such as pension funds and life insurance companies. By using a panel of the largest non-financial companies during the period 2004-2010, the results show that the setting of the fair value of those liabilities in the post-2005 period affects the market value of firms, not only on account of the adoption of the standards, but also due to the effect of the 2008 stock market crash.


Keywords


Companies valuation, financial crisis, International Accounting Standards (IAS), IFRS, pension plans.

Full Text:

PDF

References


Adams, C. A.; Weetman, P. & Gray, S. J. (1993). Reconciling national with international accounting standards – Lessons from a study of Finnish corporate reports. European Accounting Review, 2 (3), 471-494.

Aisbitt, S. (2006). Assessing the effect on the transition to IFRS: The case of the FTSE 100. Accounting in Europe, 3, 117-133.

Albuquerque, F.; Almeida, M. & Quirós, J. (2011). The Culture and the accounting values: An empirical study in view of Portuguese preparers. Journal of International Business and Economics, 11(2).

Ashbaugh, H. & Olsson, P. (2002). An exploratory study of the valuation properties of cross-listed firms’ IAS and U.S. GAAP Earnings and Book Values. The Accounting Review, 77(1), 107-126.

Baltagi, B. (2008). Econometric Analysis of Panel Data, John Wiley & Sons, Ltd.

Beynon, M. J.; Clatworthy, M. A. (2012). A fuzzy-based approach to residual income equity valuation. Rev Quant Finan Acc (2013) 40,675–690.

Callao, S.; Jarne, J. I. & Lainez, J. A. (2007). Adoption of IFRS in Spain: Effect on the comparability andrelevance of financial reporting. Journal of International Accounting, Auditing and Taxation, 16(2), 148-178.

Collins, D.; Maydew, E. & Weiss, I. (1997). Changes in the value-relevance of earnings and book values overthe past forty years. Journal of Accounting and Economics, 24, 39–67.

Cordeiro, R.; G. Couto & Silva, F. (2007). Measuring the Impact of International Financial Reporting Standards (IFRS) in Firm Reporting: The Case of Portugal. Available at SSRN:http://ssrn.com/abstract=969972.

Costa, J. (2008). O impacto da Adopção das IAS/IFRS nas Demonstrações financeiras das empresascotadas na Euronext Lisboa. (Master Thesis on Accounting). Faculdade de Economia, Universidade do Porto, Portugal.

Fasshauer, J.; Glaum, M. & Street, D. (2008). Adoption of IAS 19R by Europe’s premier listed companies:

Corridor approach versus full recognition, Summary of an ACCA research monograph. Journal of International Accounting, Auditing and Taxation, 17, 113–122.

Gueifão, M. (2007). Análise do impacto da aplicação obrigatória e pela primeira vez das normas do IASB

nas empresas cotadas em alguns países da UE. (Master Thesis on Accounting). Instituto Superior de Ciências do Trabalho e da Empresa.

Guerreiro, M.; Rodrigues, L. & Craig, R. (2008). The preparedness of companies to adopt International

Financial Reporting Standards: Portuguese evidence. Accounting Forum, 32, 75–88.

Guerreiro, M.; Rodrigues, L. & Craig, R. (2012). Factors influencing the preparedness of large unlisted companies to implement adapted International financial reporting standards in Portugal. Journal of International Accounting, Auditing and Taxation, 21, 169– 184.

Guerreiro, M.; Rodrigues, L. & Craig, R. (2012b). Voluntary adoption of International Financial Reporting

Standards by large unlisted companies in Portugal – Institutional logics and strategic responses. Accounting, Organizations and Society, 37, 482–499.

Horton, J. & G. Serafeim (2008). Market Reaction and Valuation of IFRS Reconciliation Adjustments: First Evidence from the UK. Available at SSRN: http://ssrn.com/abstract=923582.

Hung, M. & Subramanyam, K. (2007). Financial statement effects of adopting international accounting standards: The case of German. Review of Accounting Studies, 12(4), 623-657.

Jermakowicz, E. (2004). Effects of Adoption of International Financial Reporting Standards in Belgium:The Evidence from BEL-20 Companies. Accounting in Europe, 1, 51-70.

Jorgensen, P. (2004). On Accounting Standards and Fair Valuation of Life Insurance and Pension Liabilities. Scand. Actuarial Journal, 104(5), 372-394.

Liao, Q.; Sellhorn, T. & Skaife, H. (2012). The Cross-Country comparability of IFRS earnings and book values: Evidence from France and Germany. Journal of International Accounting Research, 11(1), 155–184.

Liu, Chunhui; Yao, Lee J.; Hu, Nan & Liu, Ling (2011). The Impact of IFRS on Accounting Quality in a Regulated Market: An Empirical Study of China. Journal of Accounting, Auditing & Finance, 26(4), 659-676. doi: 10.1177/0148558X11409164

Lopes, P. & Viana, R. (2008). The transition to IFRS: disclosures by Portuguese listed companies. Working Papers, No. 285, Faculdade de Economia do Porto.

Morais, A.I. (2008). Actuarial Gains and Losses: the Choice of the Accounting Method. Accounting in Europe, 5(2), 127–139.

Morais, A. I. & Curto, J. D. (2008). Accounting quality and the adoption of IASB standards – portuguese Evidence. R. Cont. Fin.. USP, São Paulo, 19(48), 103 – 111.

Olhson, J. (1995). Earnings, Book values and Dividends in Equity Valuation. Contemporary Accounting Research, 11, 2.

Perramon, J. & Amat, O. (2006). IFRS Introduction and its Effects on Listed Companies in Spain. Economics Working Papers, No 975, Universidade Pompeu Fabra, Departmento de Economia e Negocios.

Tsalavoutas, I.; André, P.; Evans, L. (2012). The transition to IFRS and the value relevance of financial statements in Greece. The British Accounting Review, 44, 262–277.

Verbeek, M. (2012), A guide to modern econometrics, John Wiley & Sons.




DOI: http://dx.doi.org/10.18533/ijbsr.v4i11.654

Refbacks

  • There are currently no refbacks.




Copyright (c)

 ...........................................................................................................................

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

............................................................................................................................

If you find difficulties in submitting manuscript please forward your doc file to support@thejournalofbusiness.org. Our support team will assist you in submission process and other technical matters.

In order to get notifications on inbox please add  this domain thejournalofbusiness.org in your email safe list.

International journal of business and social research (Print)
ISSN 2164-2540

International journal of business and social research (Online)
ISSN 2164-2559

[International Journal of Business and Social Research (IJBSR) previously published by MIR Center for Socio-Economic Research, MD, USA. From February 2018 this journal is published by the LAR Center Press, OR, USA]