| Summary: | 碩士 === 輔仁大學 === 會計學系碩士班 === 104 === Since 2005, the EU began to adopt International Financial Reporting Standards (hereafter IFRS). Listed firms in Taiwan are also mandated to adopt IFRS from 2013. Therefore, the economic consequences of the adoption of IFRS are one of the issues arising from the recent academic concern. Recent studies have discussed the economic consequences of adopting IFRS from the perspectives of accounting information quality, analysts’s forecasting accuracy and the market reaction to the adopting of IFRS. This paper intends to investigate the effect of adopting IFRS from the perspective of vertical information transfer from downstream to upstream firms.
When investors evaluate the company's stock price in addition to refer to the company's earnings figures, will also refer to the downstream company's revenue situation. If downstream companies make positive earnings , the investors of the upstream companies would consider the earnings of downstream firms into the stock prices of the upstream firms. In other words, the earnings of downstream firms are value relevant to the stock prices of upstream firms. This study aims to investigate the influence of adopting IFRS on the information transfer from downstream firms to upstream firms. If the value relevance of the earnings of downstream firms significantly increases, this finding could be regarded as evidence that the information quality of earnings increases after adopting IFRS.
The sample period of this study covers from 2000 to 2015, and the total sample comprise 22,603 fiscial-year observations.The empirical results show that average earnings per share of downstream industries exhibits explanatory power to the stock prices of upstream firms, and the effect increases after the adoption of IFRS. The increase in the value relevance of the earnings of downstream firms could be regarded as one of the advanteges of adopting IFRS.
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