The Role of Conservatism in the Fair Value Recognition of Investment Property under IFRS

• In Event: Financial Accounting & Reporting II - Conservatism and Debt Contracting (100 mins)

Abstract

This paper examines the predictive ability (relevance) of fair value adjustments for future cash flow outcomes of investment property. We hypothesize and find that the predictive ability of fair value adjustments for future financial outcomes (future cash flows) in the post-IFRS regime increases with the levels of accounting conservatism practiced by firms in the pre-IFRS regime. Our empirical tests control for possible self-selection of sample firms into low and high accounting conservatism groups.

Authors

• Sati P Bandyopadhyay, University of Waterloo

• Changling Chen, University of Waterloo

• Mindy S Wolfe, University of Waterloo