The effect of IFRS on the value relevance of financial information and financial statement analysis for the companies traded in Borsa İstanbul

In this study, the impact of International Financial Reporting Standards (IFRS) on the value relevance of financial information and the financial statement analysis of Turkish listed manufacturing companies on Borsa İstanbul is empirically examined. The Study is conducted for pre-IFRS (2000-2004) and post-IFRS (2005-2010) periods using a sample of 26 companies which were continously operating for these two periods. The periods are compared to investigate whether IFRS has an increasing impact on the value relavance of accounting information by using Price Model (Ohlson, 1995) and Return Model (Easton and Harris, 1991). Ratio Model is used to examine the impact on the financial statement analysis. The panel regression analyses results show that, the value relevance of financial information increased after the adoption of IFRS for Turkish listed companies. According to the results obtained from Price and Return Models, the value relevance of financial information has been increased after IFRS adoption considering the book value of equity and change in the net income. However, the research findings based on the Ratio Model show that, the financial ratios obtained from the financial statements prepared in pre-IFRS period has more contribution on describing the stock returns than the financial ratios obtained from the financial statements prepared in post-IFRS period. Keywords: IFRS, value relevance, financial statements, financial information