First time adoption of IFRS, Fair value option, conservatism: Evidences from French listed companies
Résumé
The European Commission set 2005 as the date for the move to IFRS for all companies listed on European stock
exchanges. The paper studies the first adoption of IFRS within the perspective of the accounting options
concerning the fair value method. The optional standards included in the study are: fair value exemption of IFRS
1, IAS 16, 38 and 40. The sample is composed of the firms of the SBF 120 index.
The paper pursues two main objectives. Firstly, from an explanatory point of view, French fair value choices
during the first adoption of the IFRS are presented. The second goal of the article is to reveal the determining
factors behind those choices. The Positive Accounting Theory (PAT), of which one of the main objectives is to
explain firms' accounting choices, is used as an explanatory background. IFRS choices are linked to the
characteristics of the firm such as: size, leverage, CEO's compensation, ownership structure, cross-listing and
financial sector.
The statistical analysis uses a logistic regression method to attempt to identify systematic differences between
firms adopting fair value and others. This study considers the choice of conservatism as an identified criterion
for explaining fair value choices. The research query can be summed up thus: How the PAT can explain fair
value accounting options made by French companies during the transition to IFRS standards? The paper is
organized as follows: an overview of IFRS, the literature review, presentation of the sample, the hypothesis, the
statistical method, the results and the discussion
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