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The effects of mandatory IFRS adoption and conditional conservatism on European bank values

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  • Manganaris, Panayotis
  • Spathis, Charalambos
  • Dasilas, Apostolos

Abstract

This study examines the relationship between the value relevance of accounting information and the conditional conservatism of the European banking sector. Using a bank data set from 15 European countries we study the value relevance of accounting information before and after mandatory IFRS adoption, as well as the extent to which conditional conservatism and value relevance coexist in this context. Our findings suggest that conditional conservatism is positively (negatively) related to value relevance prior to (post) mandatory IFRS adoption. This finding validates the IASB's objectives of higher value relevance and lower conservatism. Additional analyses provide evidence that country-specific features not only affect the potential increase in accounting quality, but also the relationship between value relevance and conditional conservatism.

Suggested Citation

  • Manganaris, Panayotis & Spathis, Charalambos & Dasilas, Apostolos, 2015. "The effects of mandatory IFRS adoption and conditional conservatism on European bank values," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 24(C), pages 72-81.
    • Handle: RePEc:eee:jiaata:v:24:y:2015:i:c:p:72-81
    DOI: 10.1016/j.intaccaudtax.2015.02.004
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    2. Adwan, Sami & Alhaj-Ismail, Alaa & Girardone, Claudia, 2020. "Fair value accounting and value relevance of equity book value and net income for European financial firms during the crisis," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 39(C).
    3. Eliwa, Yasser & Aboud, Ahmed & Saleh, Ahmed, 2021. "ESG practices and the cost of debt: Evidence from EU countries," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 79(C).

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