K-IFRS 의무도입에 따른 회계정보의 가치관련성 변화와 투자자의 반응

All listed firms in Korea are required to prepare their financial statements in accordance with International Financial Reporting Standards(IFRS) from January 1, 2011. The transition to IFRS is one of the biggest events in the history of financial reporting in Korea. It is alleged that as a single set of internationally accepted high quality financial standards, IFRS can improve quality of accounting information, ensure a high level of transparency, and reduce cost of capital. However, debate on the benefits of mandatory adoption of IFRS is still ongoing among academics. In the wake of IFRS-based financial reporting in Korea, the Korea Accounting Standard Board(KASB) translates and issues all the statements of International Accounting Standards (IAS) and IFRS into Korean, called K-IFRS. This paper examines whether the quality of accounting information produced under the K-IFRS is higher than that produced under the K-GAAP. The accounting quality is measured by the value relevance of earnings and book value of equity(BVE) and stock price reaction to the pre-disclosure information. Price in capital market is generally known to reflect the economic substance of a firm as it is theoretically a firm’s present value of future cash flows. If earnings and the BVE produced under the K-IFRS better represent the economic substance of a firm than the K-GAAP, the value relevance of accounting information produced under the K-IFRS will increase, and that of the reconciliation adjustments of earnings and BVE from K-IFRS to K-GAAP also will increase. And, if the accounting information produced under the K-IFRS provides new information for the market, the reconciliation adjustments of earnings from K-IFRS to K-GAAP at the point of the pre-disclosure will show significant price responses. Mandatory adopters of K-IFRS in 2011 are encouraged to provide pre-disclosure information about ‘the preparation plans of K-IFRS adoption’ on annual reports or audit reports before 2 years of adoption. They are also recommended to show ‘the impact of adopting K-IFRS on a firm’s financial position and performance’ before 1 year of adoption. This paper uses the pre-disclosure information of 565 firms to compare value relevance of accounting numbers prepared under the K-GAAP with those prepared under the IFRS for the same firm and in the same year. The research design using the pre-disclosure data enables us to examine the effect of adopting K-IFRS ‘under other things being equal condition’ that naturally controls for time series and cross sectional differences. The pre-disclosure information generally provides detailed information about the reconciliation adjustments of earnings and BVE from K-GAAP to K-IFRS. We classify earnings and BVE adjustments into five components (tangible assets, intangible assets, employee benefits, security of applied equity method, and others). Research findings show that the reconciliation adjustments of earnings from K-GAAP to K-IFRS have incremental value relevance over K-GAAP information, but those of BVE do not have significant relevance to investors. This result implies that earnings under the K-IFRS can provide new information to investors, but BVE under the K-IFRS does not have new information value over K-GAAP. The stock price reaction to the earnings reconciliation adjustments from K-GAAP to K-IFRS is significant until 4 days after the pre-disclosure date, which means that the transition information is useful to investors. The contributions of this paper are as follows. First, this paper is one of the earliest papers that analyze whether the mandatory adoption of K-IFRS influences the accounting quality of financial reports in Korea. Second, this paper use the pre- disclosure data which enables to control the changes in economic and firm characteristics during the period before and after the adoption of K-IFRS.