ABSTRACT
The main objective of this research is to highlight the usefulness of the accounting figures produced as a result of compliance with all the mandatory disclosure requirements of financial reporting standards for investors in making their investment decisions. Top five companies from every sector listed on Pakistan Stock Exchange, apart from the financial services sector are studied for the years 2006-2016. An item-based index is created to calculate the compliance score for every selected firm and is regressed on the returns of every firm using the extended Returns model to estimate the impact of compliance with IFRSs/IASs’ mandatory disclosure requirements on value relevance. Results show significant figures for Earnings, Changes in Earnings and Compliance index while the control variables of extended returns model, namely Profitability, Size and Industry, show insignificant results. This study is aimed at assisting regulatory bodies to strengthen their policies toward compliance with financial reporting laws to safeguard the interests of investors.
