Level of compliance with the revenue disclosure requirements of IFRS and its impact on stock prices, market capitalization, and financial ratios in the Philippine property sector

• Main Authors: Li, Yanyan, Lim, Kristy Mae L., Mejia, Justine Audrey S., Oliveros, Aimee Nicole L.
• Format: text
• Language: English
• Published: Animo Repository 2013
• Online Access: https://animorepository.dlsu.edu.ph/etd_honors/364
• Institution: De La Salle University

In past years, financial bubbles brought about abrupt increases in both revenue and stock prices that did not reflect the intrinsic value of the company of stakeholder choice. The layman investors who would depend highly on sales, revenues, and shares prices a indicators of a worthy investments may be misled by a company's tendency not to comply with the proper financial reporting standards on revenue disclosure. This study focused on revenue recognition because of its susceptibility to deliberate management manipulation. As such, the purpose of the study was to determine the extent of compliance of Philippine publicly-listed companies from the property sector with required revenue disclosures of IFRS. This study also aimed to determine if a relationship exists between disclosure compliance and stock price, market capitalization, and select financial ratios during the years 2008 to 2012. Firm structure related factors were also used to test if they affect the same set of dependent variables. The researchers made use of panel regression using pooled data. Results show that IFRS revenue disclosure compliance coupled with firm structure-related factors significantly affect three market performance indicators, namely, market capitalization, basic earnings per share, and price to sales ratio, of the Philippine publicly-listed companies under the property industry. The extent of revenue compliance therefore does not affect stock price and other financial ratios used in the study. Among all the users of the financial of the statements, investors should exercise the most prudent judgment in making their investment decisions.