When comparing the explanatory power of regression (b) and (c), findings document a lower valuerelevance of accounting data under IFRS than under Italian GAAP, suggesting that accounting
disclosure based on Italian GAAP is more informative than IFRS. These results are consistent with
prior studies on consolidated accounts, which have interpreted the lower value-relevance of book
value and net income under IFRS as an effect of greater noise (measurement error) in the IFRS
numbers (Hung and Subramanyam 2007, Morais and Curto 2009, Jarva and Lantto 2012). According
to the Vuong statistics, the difference in the explanatory power of regression (b) and (c) is significant
at the 10% level.
The relative value-relevance test therefore fails to provide support to the second research hypothesis.
Table 9 reports results from the incremental value-relevance test for IFRS
When comparing the explanatory power of regression (b) and (c), findings document a lower valuerelevance of accounting data under IFRS than under Italian GAAP, suggesting that accounting
disclosure based on Italian GAAP is more informative than IFRS. These results are consistent with
prior studies on consolidated accounts, which have interpreted the lower value-relevance of book
value and net income under IFRS as an effect of greater noise (measurement error) in the IFRS
numbers (Hung and Subramanyam 2007, Morais and Curto 2009, Jarva and Lantto 2012). According
to the Vuong statistics, the difference in the explanatory power of regression (b) and (c) is significant
at the 10% level.
The relative value-relevance test therefore fails to provide support to the second research hypothesis.
Table 9 reports results from the incremental value-relevance test for IFRS
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