The influence of mandatory adoption of IFRS in Argentina on value relevance of accounting information

Figures & data

Table 1. Sample selection

		Pre- IFRS	Post- IFRS
	Public firms	Sample size	Sample size
Initial sample: firms listed on the Buenos Aires Stock Exchange	90
Less:
Financial and insurance companies (IFRS not applicable)	−17
Firms that do not fall into both groups (Pre- and Post-IFRS)	−9
Firms lacking necessary financial or market data	−15
Firms with irregular closing dates	−9
Final sample	40	1,714	1,065

^{Initial sample comprises all listed firms in Argentina, for the 23-year period from 1997 to 2019; and it is then divided into two groups: “Pre-IFRS” and “Post-IFRS”. Sample size is measured in quarter of years available. Variable definitions are included in (Table 2)}

Table 2. Definitions of variables

Variable	Abbreviation	Type	Formula
Market Value of Equity	MV	dependent variable	Market value of Equity of a firm i three months after quarter t
Net Earnings	E	independent variable	Net Earnings of firm i at quarter-end t
Book Value of Equity	BV	independent variable	Book Value of Equity of firm i at quarter-end t
Growth	GROW	control variable	GROW = (Sales t/Sales t-1) −1
Leverage	LEV	control variable	Total Long-Term Debt divided by Total Assets for firm i at quarter-end t

Table 3. Descriptive statistics for firm-quarter observations

Panel A: Pre-IFRS Group (1997–2011)
		Mean	Median	Minimum	Maximum	Std. Dev.
Market Value of Equity	MV	2,117.00	183.00	0.18	78,859.00	8,509.00
Net Earnings	E	40.93	3.02	−2,257.00	1,596.00	202.80
Book Value of Equity	BV	1,373.00	394.20	−1,440.00	26,060.00	3,486.00
Growth	GROW	0.13	0.04	−2,076.00	6.36	0.55
Leverage	LEV	0.15	0.09	0.00	1.05	0.18
Panel B: Post-IFRS Group (2012–2019)
		Mean	Median	Minimum	Maximum	Std. Dev.
Market Value of Equity	MV	12,582.00	1,579.00	0.00	309,900.00	31,520.00
Net Earnings	E	283.00	14.86	0.00	25,017.00	1,781.00
Book Value of Equity	BV	6,458.00	695.40	−1,654.00	362,400.00	25,044.00
Growth	GROW	0.22	0.07	−0.92	6.82	0.78
Leverage	LEV	0.11	0.06	0.00	0.76	0.14

^{This table shows descriptive statistics for the dependent and independent variables. Definitions of variables are shown in (Table 2).This table shows descriptive statistics for the dependent and independent variables. Definitions of variables are shown in (Table 2).}

Table 4. Correlations among independent and dependent variables

Panel A: Pre-IFRS Group (1997–2011)
		(MV)	(E)	(BV)	(GROW)	(LEV)
Market Value of Equity	(MV)	1.0000	0.7793	0.9098	−0.0287	−0.0764
Net Earnings	(E)		1.0000	0.7626	−0.0165	−0.1032
Book Value of Equity	(BV)			1.0000	−0.0372	−0.0836
Growth	(GROW)				1.0000	0.0040
Leverage	(LEV)					1.0000
Panel B: Post-IFRS Group (2012–2019)
		(MV)	(E)	(BV)	(GROW)	(LEV)
Market Value of Equity	(MV)	1.0000	0.3803	0.8188	0.0392	0.1665
Net Earnings	(E)		1.0000	0.4715	0.0792	0.0297
Book Value of Equity	(BV)			1.0000	0.0227	0.1194
Growth	(GROW)				1.0000	0.0336
Leverage	(LEV)					1.0000

^{This table reports Pearson correlation coefficients among variables. Definitions of Variables are noted in}(^{Table 2). The number of firm-quarter observations is 1,714 in the Pre-IFRS Group, and 1,065 in the Post-IFRS Group.}

Table 5. White’s test for heteroscedasticity

Panel A: Pre-IFRS Group (1997–2011)
1714 observations, 40 cross-sectional units, time-series length: min 15, max 59
Null hypothesis: heteroscedasticity not present
Tst statistic: LM = 765.08
with p-value = P(Chi-square(14) > 765.08) = 0.0000
Panel B: Post-IFRS Group (2012–2019)
1065 observations, 40 cross-sectional units, time-series length: min 2, max 32
Null hypothesis: heteroscedasticity not present
Test statistic: LM = 455.049
with p-value = P(Chi-square(14) > 455.049) = 0.0000

^{The table shows the White (1980) heteroscedasticity test corresponding to the Pooled OLS panel data model. Panel A reports the results for the Pre-IFRS Group, and Panel B reports the results for the Post-IFRS Group. Both results suggest the possible presence of heteroscedasticity. Hence, robust standard errors are computed.The table shows the White (1980) heteroscedasticity test corresponding to the Pooled OLS panel data model. Panel A reports the results for the Pre-IFRS Group, and Panel B reports the results for the Post-IFRS Group. Both results suggest the possible presence of heteroscedasticity. Hence, robust standard errors are computed.}

Table 6. Collinearity diagnostics

Panel A: Pre-IFRS Group (1997–2011)
Belsley-Kuh-Welsch collinearity diagnostics for Fixed Effects regression:
Variance proportions
Lambda	Condition index	Const.	E	BV	GROW	LEV
2.576	1.000	0.030	0.028	0.040	0.016	0.035
1.054	1.563	0.010	0.298	0.032	0.221	0.046
0.886	1.705	0.016	0.083	0.000	0.759	0.049
0.333	2.781	0.013	0.513	0.490	0.000	0.299
0.150	4.139	0.931	0.078	0.437	0.004	0.571
Lambda: smallest is 0.150336
Count of condition indices ≥ 30 (strong linear dependence): 0
Count of condition indices ≥ 10 (moderately strong linear dependence): 0
			E	BV	GROW	LEV
Variance Inflation Factors:			2.400	2.394	1.002	1.011
Panel B: Post-IFRS Group (2012–2019)
Belsley-Kuh-Welsch collinearity diagnostics for Fixed Effects regression:
Variance proportions
Lambda	Condition index	Const.	E	BV	GROW	LEV
2.326	1.000	0.040	0.032	0.057	0.035	0.039
1.162	1.415	0.032	0.327	0.127	0.003	0.039
0.872	1.633	0.008	0.000	0.019	0.937	0.019
0.474	2.217	0.016	0.633	0.796	0.008	0.009
0.166	3.741	0.904	0.008	0.001	0.017	0.894
Lambda: smallest is 0.166253
Count of condition indices ≥ 30 (strong linear dependence): 0
Count of condition indices ≥ 10 (moderately strong linear dependence): 0
			E	BV	GROW	LEV
Variance Inflation Factors:			1.295	1.305	1.008	1.017

^{aDefinitions of variables are shown in (Table 2).}

Table 7. Panel data with fixed effects

		(1)					(2)
		Pre-IFRS Group					Post-IFRS Group
		(1997–2011)					(2012–2019)
Constant		−798.49					5,082.02	*
		(590.0960)					(2,786.9200)
Net Earnings	(E)	8.07					−0.2157
		(4.8166)					(1.2613)
Book Value of Equity	(BV)	1.81	***				0.80	**
		(0.3934)					(0.3132)
Growth	(GROW)	−10.70					1,495.99	*
		(42.5961)					(820.3040)
Leverage	(LEV)	638.74					18,684.50
		(550.994)					(16,423.5000)
Observations		1,714					1,065
LSDV R-squared		0.8967					0.7826
Schwarz criterion		32,319					23,766
Within R-squared		0.6224					0.4643
Akaike criterion		32,079					23,547
Hannan-Quinn		32,168					23,630
Joint test on named regressors
Test statistic: F(4, 39)		11.6532***	Test statistic: F(4, 39)				9.2841***
p-value		0.0000	p-value				0.0000
Robust test for differing group intercepts
Null hypothesis: the groups have a common intercept
Test statistic: Welch F(39, 511.8)		96.1096***	Test statistic: Welch F(39, 220.2)				19.1292***
p-value		0.0000	p-value				0.0000
T-test for mean differences
		(E)		(BV)
Test statistic:		−2.3548**		−2.8433***
p-value		0.01853		0.0045

^{The table presents the results of Panel data with fixed effects. Due to White’s test results, robust (HAC) standard errors are computed. Definitions of Variables are discussed in (Table 2); robust standard errors are reported in parenthesis; ***, ** and * indicate statistical significance at the 1%, 5% and 10% levels, respectively.The table presents the results of Panel data with fixed effects. Due to White’s test results, robust (HAC) standard errors are computed. Definitions of Variables are discussed in (Table 2); robust standard errors are reported in parenthesis; ***, ** and * indicate statistical significance at the 1%, 5% and 10% levels, respectively.}

Exhibit 1. Listed companies and final sample

Ticker	Name	Type	(A)	(B)	(C)	(D)	Sample
AGRO	AGROMETAL S.A.	Commercial					AGRO
ALUA	ALUAR ALUMINIO ARGENTINO S.A.	Commercial					ALUA
AUSO	AUTOPISTAS DEL SOL S.A.	Commercial					AUSO
GAMI	B-GAMING S.A.	Commercial		1
BBAR	BANCO BBVA ARGENTINA S.A.	Financial	1
BHIP	BANCO HIPOTECARIO S.A.	Financial	1
BMA	BANCO MACRO S.A.	Financial	1
BPA	BANCO PATAGONIA S.A.	Financial	1
BRIO	BANCO SANTANDER RIO S.A.	Financial	1
ESME	BODEGAS ESMERALDA S.A.	Commercial					ESME
BOLT	BOLDT S.A.	Commercial				1
BYMA	BOLSAS Y MERCADOS ARGENTINOS S.A.	Financial	1
CVH	CABLEVISION HOLDING S.A.	Financial	1
CGPA	CAMUZZI GAS PAMPEANA S.A.	Commercial					CGPA2
CAPX	CAPEX S.A.	Commercial				1
CAPU	CAPUTO S.A.	Commercial					CAPU
CARC	CARBOCLOR S. A.	Commercial					CARC
CADO	CARLOS CASADO S.A.	Commercial			1
CELU	CELULOSA ARGENTINA S.A.	Commercial				1
CEPU	CENTRAL PUERTO S.A.	Commercial					CEPU
URBA	CENTRAL URBANA S.A.	Financial	1
COLO	COLORIN S.A.	Commercial					COLO
COMO	COMPAÑIA ARG. DE COMODORO RIVADAVIA	Commercial			1
INTR	COMPAÑIA INTRODUCTORA DE BUENOS AIRES S.A.	Commercial		1
CTIO	CONSULTATIO S.A.	Commercial			1
COUR	CONTINENTAL URBANA S.A. INVERSORA	Financial	1
CRES	CRESUD S.A.	Commercial			1
DGCU	DISTRIBUIDORA DE GAS CUYANA S.A.	Commercial					DGCU
DOME	DOMEC S.A.	Commercial				1
DYCA	DYCASA SOCIEDAD ANONIMA	Commercial					DYCA
EDSH	EDESA HOLDING S.A.	Financial	1
EDLH	EDESAL HOLDING S.A.	Financial	1
EMAC	ELECTROMAC S.A.	Commercial		1
EDN	EMPRESA DISTRIB. Y COMERC. NORTE S.A.	Commercial					EDN
EMDE	EMPRESA DISTRIBUIDORA ELECTRICA REGIONAL S.A.	Commercial					EMDE
ELAP	EMPRESA DISTRIBUIDORA LA PLATA S.A.	Commercial			1
DSUR	EMPRESA DISTRIBUIDORA SUR S.A. (EDESUR)	Commercial			1
CECO	ENEL GENERACION COSTANERA S.A.	Commercial					CECO2
FERR	FERRUM S.A.	Commercial					FERR
FIPL	FIPLASTO S.A.	Commercial					FIPL
REGE	GARCIA REGUERA S.A.	Commercial				1
GARO	GAROVAGLIO Y ZORRAQUIN S. A.	Commercial					GARO
GRIM	GRIMOLDI S.A.	Commercial					GRIM
GCLA	GRUPO CLARIN S.A.	Commercial					GCLA
OEST	GRUPO CONCESIONARIO DEL OESTE S.A.	Commercial					OEST
GGAL	GRUPO FINANCIERO GALICIA S.A.	Financial	1
VALO	GRUPO FINANCIERO VALORES S.A.	Financial	1
GSUP	GRUPO SUPERVIELLE S.A.	Financial	1
HAVA	HAVANNA HOLDING S.A.	Commercial		1
JMIN/HARG	HOLCIM (Argentina) S.A.	Commercial					HARG
Ticker	Name	Type	(A)	(B)	(C)	(D)	Sample
HULI	HULYTEGO S.A.	Commercial			1
PATA	IMPORTADORA Y EXP. DE LA PATAGONIA S.A.	Commercial					PATA
ROSE	INSTITUTO ROSENBUSCH S.A.	Commercial					ROSE
IEBA	INVERSORA ELECTRICA DE BUENOS AIRES S.A.	Commercial			1
INVJ	INVERSORA JURAMENTO S.A.	Commercial		1
IRSA	IRSA INVERSIONES Y REPRESENTACIONES S.A.	Commercial			1
IRCP	IRSA PROPIEDADES COMERCIALES S.A.	Commercial			1
RICH	LABORATORIOS RICHMOND S.A.C.I.F.	Commercial		1
LEDE	LEDESMA S.A.	Commercial				1
LEID	LEYDEN S.A.	Commercial			1
LOMA	LOMA NEGRA COMPAÑIA INDUSTRIAL ARG. S.A.	Commercial		1
LONG	LONGVIE S.A.	Commercial					LONG
MTBA	MATBA ROFEX SOCIEDAD ANONIMA	Financial	1
METR	METROGAS S.A.	Commercial					METR
MVIA	METROVIAS S.A.	Commercial			1
MIRG	MIRGOR S.A.	Commercial					MIRG
MOLA	MOLINOS AGRO S.A.	Commercial		1
SEMI	MOLINOS JUAN SEMINO S.A.	Commercial				1
MOLI	MOLINOS RIO DE LA PLATA S.A.	Commercial					MOLI
MORI	MORIXE HERMANOS S.A.	Commercial				1
GBAN	NATURGY BAN S.A.	Commercial					GBAN
NCON	NUEVO CONTINENTE S.A.	Financial	1
PAMP	PAMPA ENERGIA S.A	Commercial					PAMP
PREN	PAPEL PRENSA S.A.	Commercial		1
PATR	PATRICIOS S.A.	Commercial			1
PSUR	PETROLERA DEL CONOSUR S.A.	Commercial					PSUR
PGR	PHOENIX GLOBAL RESOURCES P.L.C.	Financial	1
POLL	POLLEDO S.A.	Commercial			1
PATY	QUICKFOOD S.A.	Commercial					PATY
RIGO	RIGOLLEAU S.A.	Commercial				1
SAMI	S.A. SAN MIGUEL	Commercial					SAMI
COME	SOCIEDAD COMERCIAL DEL PLATA S.A.	Commercial					COME
TECO	TELECOM ARGENTINA S. A.	Commercial					TECO2
ERAR/TXAR	TERNIUM ARGENTINA SOCIEDAD ANONIMA	Commercial					TXAR
TGLT	TGLT S.A.	Commercial			1
TRAN	TRANSENER CIA. DE TRANSP. DE ENERGIA ELECTR.	Commercial					TRAN
TGNO	TRANSPORTADORA DE GAS DEL NORTE S.A.	Commercial					TGNO
TGSU	TRANSPORTADORA DE GAS DEL SUR S.A.	Commercial					TGSU
INDU	UNIPAR INDUPA S.A. INDUSTRIAL Y COMERCIAL	Commercial					INDU
YPFD	YPF S.A.	Commercial					YPFD
Totals	90		17	9	15	9	40

^{List of public companies in Argentina for the 23-year period from 1997 to 2019. Excluded companies from the final sample are: (A) Financial and insurance companies, as IFRS are not applicable for them; (B) Firms that do not fall into both groups (Pre and Post-IFRS); (C) Firms lacking necessary financial or market data, (D) Firms with irregular closing dates. The list of 40 companies included in the final sample is presented in the last column.}