Value relevance of financial information: A comparative study of pre- and post- implementation of Indian accounting standards


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In 2016, India implemented new accounting standards, Ind AS, aligning with IFRS to increase transparency in the financial reporting of Indian companies. This study examines the value relevance of financial information in India before and after the adoption of Indian accounting standards (Ind AS) by comparing the published financial statements in pre- and post-Ind AS periods and determines the influence of financial information on the market price of shares. The study period is for twelve years, from 2011 to 2022, divided into 2011–2016 (pre-Ind AS period) and 2017–2022 (post-Ind AS period). To evaluate the value relevance of financial information, the Ohlson pricing model is employed on the panel data of the blue-chip companies listed in the Nifty 50 Index. The results from the Least Squares regression reveal that the net cash from investing activities, profit-after-tax, and book-value-per-share were relevant for investment decisions prior to the adoption of the Ind AS. In contrast, the profit-after-tax had no explanatory power during the post-Ind AS period. However, the net cash from investing activities and the book-value-per-share significantly influenced the market price of equity since the implementation of Ind AS. The value relevance of the accounting statements was superior in the pre-Ind AS period compared to the post-Ind AS.

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    • Table 1. Descriptive statistics, pre-Ind AS (2011–2016)
    • Table 2. Descriptive statistics, post-Ind AS (2017–2022)
    • Table 3. Pearson correlation, pre-Ind AS (2011–2016)
    • Table 4. Pearson correlation, post-Ind AS (2017–2022)
    • Table 5. Regression, pre-Ind AS (2011–2016)
    • Table 6. Regression, post-Ind AS (2017–2022)
    • Conceptualization
      K. P. Venugopala Rao
    • Methodology
      K. P. Venugopala Rao
    • Resources
      K. P. Venugopala Rao
    • Supervision
      K. P. Venugopala Rao
    • Validation
      K. P. Venugopala Rao
    • Writing – original draft
      K. P. Venugopala Rao
    • Formal Analysis
      Farha Ibrahim
    • Investigation
      Farha Ibrahim, Mani Sree Tadi
    • Software
      Farha Ibrahim, Mani Sree Tadi
    • Writing – review & editing
      Farha Ibrahim, Mani Sree Tadi
    • Data curation
      Mani Sree Tadi