School of Accountancy Research Seminar Series 2019

 Fan Yang UNSW Ph.D. candidate Friday 2 August  12 noon Gardens Point B304 | Hosted by Prof Ellie Chapple

‘Value Relevance of Historical Cost and Fair Value Accounting Information: Evidence from the European Real Estate Industry’

Extant evidence on the value relevance of fair values for tangible asset varies depending on the type of asset being measured, sample firms being examined, as well as research design being employed. This study re-assesses the value relevance of historical cost versus fair value accounting information in the context of the European real estate industry around mandatory IFRS adoption. I use this sample because of its unique operating characteristics and the variation in the sample firms’ accounting treatment method for their primary operating assets, i.e., investment properties, around IFRS adoption. I find that after controlling for the effect of systematic changes surrounding IFRS adoption, switching from the cost model to the fair value model when accounting for investment properties at the adoption of IFRS (or IAS 40) improves the value relevance of both balance sheet and net income information. I further find that fair value accounting information are of higher value relevance in countries with the custom of asset revaluation.

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