Is the value relevance relevant?

Abstract

The IFRS adoption by listed companies in Brazil brought the discussion on whether these standards have improved the quality of accounting information through their effect on stock prices. The empirical studies demands a renewed analysis of the accumulated evidences on the value relevance of net income (NI) and shareholders' equity (SE). A meta-analysis of the published studies on the subject was carried out, examining separately the price and return models proposed by Ohlson (1995). The sample consisted of 26 articles that analyzed Brazilian companies from 1997 to 2014, covering 18,562 observations for the pre-IFRS period, and about 17,381 observations for the post IFRS, for the price and return model. The results evidenced a decline in the value relevance of the SE and the gain in the relevance of the NI after the adoption of IFRS.