Ifrs Adoption in Spain and the United Kingdom: Effects on Accounting Numbers and Relevance

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Tutorial questions for Topic 6

Reading exercise

Read Gaston et al (2010) article “IFRS adoption in Spain and the United Kingdom: Effects on accounting numbers and relevance” and find out the answer for the following questions:

Q1 What are the research objectives? (the last 5 paragraphs of section 1)

The main purpose of this research is to compare and contrast the quantitative impact of the IFRS adoption on financial reporting in Spain and the UK. There are two main research objectives. First it explores the economic and financial effect of the IFRS adoption for companies in the two countries. The second objective is to examine whether or not the IFRS will improve the usefulness of financial reporting. It is expected that companies’ market value and book value will increase under the IFRS adoption in both countries (Gaston et al, 2010). If you use direct quotation instead:

“The first objective of our study is to analyse the impact of IFRS on financial reports issued by companies in Spain and the UK” (Gaston et al, 2010, p306).

Q2 What is the research sample size? (section 3.1 in page 306) 100 companies from the Madrid Stock Exchange General Index (IGBM) and 74 companies from the Financial Time Stock Exchange Index 100 (FTSE 100) (excluding financial institutions, holding companies and insurance firms) are used for this research.

Q3 How many hypotheses are proposed, and what are they? (section 3.3, p306-308) There are three hypotheses are proposed in this study and they are: “H01: There are no significant differences in the value of accounting figures and financial ratios determined under local GAAP and IFRS” “H02: There are no significant differences in the relative impact of IFRS on the value of accounting figures and financial ratios in the UK and Spain” “H03: There are no significant differences in the book values (per local GAAP and IFRS) and market value of firms” “H04: There are no significant differences in the Gap(spainlocal),...
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