Abstract:
Accounting Information would be beneficial only if it is relevant to the decision being
made. According to International Accounting Standard Board, the usefulness of
accounting information depends on the fundamental qualitative characteristics of
Relevance and Faithful Representation. As a result of harmonization and
standardization, International Financial Reporting Standards (IFRS) were adopted in
Sri Lanka from 1st January 2012 as a developing country. Given the differences exists
between develop and developing countries in the contest of accounting profession
and other contextual differences, the impact of IFRS adoption in developing countries
is still remaining as an empirical gap in the accounting literature. Therefore the main
purpose of current study is to examining the impact of International Financial
Reporting Standard on the accounting information quality, in terms of value relevance
and the effect on key financial measures of financial statement in Sri Lanka.
Data for the current study is collected from audited annual financial statements and
Colombo Stock Exchange reports for all the listed manufacturing companies in Sri
Lanka, for the period of 9 years from 2008/2009 to 2016/2017 financial year. Based
on the regression estimate obtained the study concludes that there is an incremental
effect on the value relevance of earnings for share, book values of equity, and cash
flow from operations. Further findings reveal that there is favorable impact financial
statement measures upon IFRS adoption of listed manufacturing sector in Sri Lanka.
