K-IFRS will be adopted in Korea by 2011. K-IFRS will enforce firms to report consolidated financial statements. In this paper, we clarify their differences from non-consolidated financial statements with more reliable financial data from 2004 to 2008.
We find that the magnitude of major financial information, except net income, is greater and key financial indexes for stability, profitability and valuation deteriorate, but those for growth and activity improve in consolidated financial statements. Consolidated earnings are managed to avoid earnings decrease and losses. Despite of the bigger magnitude of earnings management, consolidated financial statements lead better accrual quality and incremental informativeness. The market responds to the announcement of consolidated earnings, however, the value-relevance is not different from that of non-consolidated earnings.
These findings will be helpful to prevent possible confusion when K-IFRS is adopted. In addition, they will be the guidance for stakeholders in the Korean capital market.
Keywords: K-IFRS; Consolidated Financial Statements; Earnings Management; Value-relevance; Market Reaction
학회소식
[2010년 제 1차] What Do We Know about Consolidated Financial State-
작성자 : 관리자
조회수 : 1097
게시일 :
2010-02-23
