Effect of international financial reporting standards on financial information quality

Purpose - This paper aims to analyze the quality of financial information using financial and economic ratios, assessing if the quality is affected by financial reporting standards. A group of factors that allow proving of the capacity of ratios to measure accounting information quality-and thus facilitating the analysis process to the groups of users-is also determined. Design/methodology/approach - Using a sample of 111 companies from the Madrid Stock Exchange and 32 from Eurostoxx50, descriptive analysis and non-parametric variance analysis were carried out during the period 2005-2007. At the same time, reduction data techniques, specifically principal components analysis (PCA), were performed to detect the underlying main factors for the year 2007. Findings - There is an indication that financial information quality is affected by financial reporting standards. Additionally, there is a group of factors that show an alternative to analyze accounting information. Practical implications - This study provides evidence to measure financial information quality and the results can be beneficial to accounting users, as well as contributing to the literature related to this topic. Originality/value - Empirically, this study shows that accounting information is affected by financial reporting standards.