Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/64959
Title: Impact of IFRS full convergence in Hong Kong : evidence of value relevance of earnings and auditor response
Authors: Su, L 
Sun, Y 
Yao, J 
Keywords: Value relevance
IFRS
Reporting quality
Audit response
Issue Date: 2009
Source: China accounting and finance review (中國會計與財務硏究), 2009, v. 11, no. 4, p. 1-46 How to cite?
Journal: China accounting and finance review (中國會計與財務硏究) 
Abstract: This study has two objectives. The fi rst is to investigate the impact of International Financial Reporting Standards (IFRS) adoption on the relevance of earnings for equity valuation. In this regard, the 2005 full convergence to IFRS in Hong Kong provides a natural experimental setting. The opportunity is that the 2005 fi lings of Hong Kong public fi rms require disclosure of information based on the new IFRS as well as on the former local Generally Accepted Accounting Principles (GAAP) [Non-IFRS]. The second objective is to examine whether, and if so how, auditors respond to the different risk exposure arising from the IFRS numbers through their pricing decisions. Our results on the IFRS convergence in Hong Kong suggest an improvement in the value relevance of earnings following convergence. Further, audit fees are more responsive to the new IFRS numbers than to the Non-IFRS numbers, consistent with the interpretation that auditors price their audit work in response to the different risk exposure under the new IFRS numbers.
URI: http://hdl.handle.net/10397/64959
ISSN: 1029-807X
EISSN: 2307-3055
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