The Effect of International Financial Reporting Standards (IFRS) Adoption on the Value Relevance of Financial Reporting : Case of Russia

Purpose – The purpose of this study is to empirically examine the influence of International Financial Reporting Standards (IFRS) adoption by Russian public companies on the value relevance of financial reporting in Russia.Design/methodology/approach – We selected 67 Russian public companies that report both under RAS and IFRS for four consecutive years (2006 – 2009). Research limitations – The main limitation of the paper is the sample, but this can be explained by the fact that only 67 companies in Russia report under two standards (RAS and IFRS). So the sample could not be increased as there are no other companies that fulfill the characteristics of the sample.Findings – The obtained results show that on the Russian market there is no evidence of increased value relevance of financial reporting to external users of financial information after adopting IFRS when comparing and evaluating the two regimes (RAS and IFRS) unconditionally. Such results can be explained by the notion of mock compliance which originates due to the institutional differences between the RAS and IFRS development environments.Originality/value – Adoption of IFRS by companies in emerging markets has been a subject of interest for a lot of researchers, but this is the first research of the kind in the field of value relevance of adoption of IFRS on the Russian market