Changes in accounting regulations toward IFRS and value relevance of accounting information- evidence from Vietnamese listed firms

Abstract

In the late of 2014, the new Vietnamese accounting regimes for enterprises, which is regarded as being more appropriate for the business practices and being harmonized with IFRS, was issued. The new regulation is a step forward in the roadmap of IFRS adoption in Vietnam with an expectation of improvement in accounting quality. This paper contributes to the discussion of the benefit of IFRS adoption by providing statistical evidence on how the new accounting regimes effect to the value relevance of accounting information (i.e. the relationship between accounting earnings, book values of equity and share price) of Vietnamese listed firms. Based on financial data of 100 Vietnamese listed firm in 10 year (2010-2019), panel regression analysis reveals that the new accounting regimes only enhance value relevance of earnings but do not affect to the relationship between book value of equity and share prices. These results confirm that harmonization of accounting regulation with IFRS have certain effect to accounting quality. This supports for the direction to adopt IFRS in Vietnam but also alerts for more empirical research in the future to understand deeply on the cost and benefit of IFRS in developing countries like Vietnam