Did the switch to IFRS 11 for joint ventures affect the value relevance of corporate consolidated financial statements? Evidence from France and Italy

We investigate the effects of the adoption of International Financial Reporting Standard (IFRS) 11, Joint Arrangements. In so doing, we analyze whether the removal of the proportionate consolidation option and the mandatory use of the equity method in reporting for joint ventures influences the value relevance of co-venturers’ total assets and liabilities. In a reverse situation, i.e. the elimination of the equity method, Richardson, Roubi, and Soonawalla (2012) found a decline in the value relevance of the aforementioned amounts for firms forced to change reporting method, partially offset by the value relevance of joint venture data disclosure. We focus on a continental European setting and analyze a sample of 120 Italian and French non-financial listed firms over the period 2008–2015. We find a reduction in the value relevance of co-venturers’ total assets and liabilities for companies obliged to move from proportionate consolidation to the equity method. Conversely, we do not find an increase in the value relevance of joint venture disaggregated data provided in the notes