Value Relevance of Control-based Consolidated Financial Statements
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Date
2015
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Abstract
The study examines whether the switch from ownership-based guidelines for control under SSAP-8 to the principles-based guidelines (power and benefits) of FRS-37 increased the value relevance of consolidated financial statements in New Zealand. The adoption of FRS-37 led to an increase in value relevance of consolidated assets and liabilities (at the 5 percent level). Only weak evidence was found to support the view that FRS-37 was not effective (less value relevant) for entities with a large number of subsidiaries (as a proxy for investment complexity) and associates are less value relevant. The is evidence that investors view non-controlling as a liability, which does not support its presentation as equity (under IFRS 10).
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FRS-37, IAS 27, IFRS 10, control-based consolidation, value relevance, principles versus rules
Citation
2015