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korean management review - Vol. 51 , No. 4

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korean management review - Vol. 51, No. 4, pp. 895-929
Abbreviation: kmr
ISSN: 1226-1874 (Print)
Print publication date 31 Aug 2022
Received 08 Feb 2022 Revised 23 Mar 2022 Accepted 06 Apr 2022
DOI: https://doi.org/10.17287/kmr.2022.51.4.895
The Effect of the Implementation of K-IFRS 1113 on the Value Relevance of Financial Instruments
Heeju Kim ; Wonsun Paek
(First Author) Sungkyunkwan university (khj1210@g.skku.edu)
(Corresponding Author) Sungkyunkwan university (wpaek@skku.ac.kr)
공정가치측정 기준서(K-IFRS 제1113호) 시행이 금융상품의 가치관련성에 미치는 영향

Copyright 2011 THE KOREAN ACADEMIC SOCIETY OF BUSINESS ADMINISTRATION This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This study examines whether fair value measurement (K-IFRS 1113) enhances the quality of fair value accounting information for financial companies. We hypothesize that the changes in measurement criteria and expanded disclosure of fair value financial assets and liabilities required by the K-IFRS 1113 increase value relevance of lower-level fair value net assets. Empirical findings generally support our expectation. The results suggest that the implementation of K-IFRS 1113 improves explanatory power and pricing multiples on fair value financial assets and liabilities, and this improvement of value relevance is most prominent for level 2 financial assets and liabilities measured at both fair value and amortized cost. This study contributes to the literature by providing evidence that K-IFRS 1113 effectively improves the quality of fair value accounting information.


Keywords: K-IFRS 1113, IFRS 13, fair value measurement, value relevance, financial instruments

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∙ The author Heeju Kim is a Ph.D. candidate in accounting at Sungkyunkwan University. She earned a bachelor's degree in business administration from Kyung-Hee University and a master's degree in statistics from Sungkyunkwan University. Her main research interests include the quality of accounting information, value relevance, disclosure of accounting information, and audit quality.

∙ The author Wonsun Paek is a professor at Sungkyunkwan University. He earned a doctoral degree in Accounting from Temple University. His research interests include value relevance, earnings quality, and conservatism.