Earnings persistence, value relevance, and earnings timeliness: The Case of Thailand

Abstract

This research aims to investigate the enhancement of accounting quality in Thailand after adopting International Financial Reporting Standards (IFRS) in its domestic accounting system. The accounting quality consists of three properties of earnings– earnings persistence, value relevance and earnings timeliness. This research examines the improvement of accounting quality after the IFRS adoption in Thailand by expanding the conditioning institutional factor to include the magnitude of book-tax differences. In addition, the relationship between the Thai accounting quality and firm governance systems is investigated.

The results reveal that the accounting quality, including earnings persistence and value relevance, has been improved after the IFRS adoption in Thailand. The earnings timeliness is observed in Thai firms, but it has been declined after the IFRS adoption. The results also indicate that the improvement of accounting quality after the IFRS adoption in Thailand is varied according to the magnitude of book-tax differences. This research finds that the firm governance system is related to the improvement of accounting quality in Thai settings. This research concludes that the adoption of IFRS has generally improved accounting quality in Thailand. The book-tax difference contains significant information about accounting quality in Thai settings. And, the firm governance system plays an important role in accounting quality after the IFRS adoption in Thailand.