International Financial Reporting Standards (IFRS) allow firms, on a voluntary basis, to provide fair value information for fixed assets through asset revaluations. In a setting in which the demand for fair value information for fixed assets is substantial, we examine whether private firms differ from public firms in their choice of asset revaluation as a means to convey the fair value information to stakeholders. When the accounting standard setter in Korea allowed asset revaluation in the spirit of early adoption of IFRS, private firms opted for revaluation less often than public firms. However, once we control for the endogeneity of listing status (i.e., remaining private instead of going public) and allow for differential needs for revaluation, we find no difference in the propensity to revalue PP&E between private and public firms. We further find that factors that are related to corporate financing (e.g., leverage and operating performance) have much weaker effects on the propensity of private firms to revalue PP&E than on that of public firms.
Key Words: Asset revaluation; Private firms; IFRS; Early adoption; Standard setter
