Open AccessAccounting Standards and the Value Relevance of Financial Statements
Author(s) -
Shafi Mohamad,
Ooi Chee Keong,
Syed Ehsanullah
Publication year - 2019
Publication title -
asian journal of empirical research
Language(s) - English
Resource type - Journals
eISSN - 2306-983X
pISSN - 2224-4425
DOI - 10.18488/journal.1007/2019.9.11/1007.11.337.345
Subject(s) - accrual , accounting , accounting information system , accounting standard , relevance (law) , financial accounting , business , positive accounting , fair value , mark to market accounting , cash , value (mathematics) , shareholder , economics , finance , corporate governance , statistics , political science , mathematics , earnings , law
Using the data of 68 Malaysian listed firms, this study attempts to examine the relationship between accounting standards and the value relevance of financial statements. It also explores the difference in accounting treatment between accruals accounting and cash accounting, and evidence of supplies. This process confirmed that accruals accounting provided a more transparent picture of accounting information when compared with cash accounting aspect. Our findings are quite consistent with our hypothesis which clearly states that in economies wherein strong and secure protection mechanisms for shareholders exist, tend to apply the use of accruals accounting with confidence, assuming that the value relevance of accounting information would not be compromised at any stage.