Value relevance of IFRS 16 : A study of the stock market reaction

University essay from Uppsala universitet/Företagsekonomiska institutionen

Abstract: From the 1st of January companies will start to use the new accounting standard IFRS 16, and by this all leases that companies have will be recognized in the balance sheet. The implementation will have several effects on the balance sheet and the income statement and therefore change key ratios that investors use. This studies purpose is the examine how the Swedish stock market reacts during the implementation of IFRS 16.The study uses the event study method for 319 different stock on the Nasdaq OMX Stockholm stock market and uses a regression to see if the changes from IFRS 16 have an effect on the abnormal return. Although, the study finds no significant abnormal return and the implementation has low impact. Hence the study concludes that the operating leases were already incorporated during before the implementation.

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