The Impact of IFRS on the Value Relevance of Accounting Information: Evidence from Turkish Firms

Value relevance is being defined as the ability of information disclosed by financial statements to capture and summarize firm value. Value relevance can be measured through the statistical relations between information presented by financial statements and stock market values or returns. In many studies, Ohlson model (1995) has been adopted to explore relationships among the market value of equity and two main financial reporting variables, namely the book value of equity per share (represents balance sheet) and earnings per share (represents income statement). This study investigates the value relevance of accounting information in pre- and post-financial periods of International Financial Reporting Standards’ (IFRS) application for Turkish listed firms from 1998 to 2011. Market value is related to book value and earnings per share by using the Ohlson model (1995). Overall book value is value relevant in determining market value or stock prices. The results show that value relevance of accounting information has improved in the post-IFRS period (2005-2011) considering book values while improvements have not been observed in value relevance of earnings.