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Effect of international financial reporting standards on financial information quality

Elisa García Jara (Faculty of Economics and Business Sciences, Complutense University of Madrid, Madrid, Spain)
Amparo Cuadrado Ebrero (Faculty of Economics and Business Sciences, Complutense University of Madrid, Madrid, Spain)
Rolando Eslava Zapata (Department of Accounting and Management Sciences, University of The Andes Táchira, San Cristóbal, Venezuela)

Journal of Financial Reporting and Accounting

ISSN: 1985-2517

Article publication date: 25 October 2011

Abstract

Purpose

This paper aims to analyze the quality of financial information using financial and economic ratios, assessing if the quality is affected by financial reporting standards. A group of factors that allow proving of the capacity of ratios to measure accounting information quality – and thus facilitating the analysis process to the groups of users – is also determined.

Design/methodology/approach

Using a sample of 111 companies from the Madrid Stock Exchange and 32 from Eurostoxx50, descriptive analysis and non‐parametric variance analysis were carried out during the period 2005‐2007. At the same time, reduction data techniques, specifically principal components analysis (PCA), were performed to detect the underlying main factors for the year 2007.

Findings

There is an indication that financial information quality is affected by financial reporting standards. Additionally, there is a group of factors that show an alternative to analyze accounting information.

Practical implications

This study provides evidence to measure financial information quality and the results can be beneficial to accounting users, as well as contributing to the literature related to this topic.

Originality/value

Empirically, this study shows that accounting information is affected by financial reporting standards.

Keywords

Citation

García Jara, E., Cuadrado Ebrero, A. and Eslava Zapata, R. (2011), "Effect of international financial reporting standards on financial information quality", Journal of Financial Reporting and Accounting, Vol. 9 No. 2, pp. 176-196. https://doi.org/10.1108/19852511111173121

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited