The relationship between conditional conservatism and value relevance of earnings

The purpose of this study is to examine the relationship between conditional conservatism and value relevance of earnings in the post-IFRS time period. Two countries, France and Germany, have been examined in this master thesis. Value relevance of earnings has increased in France, but not in Germany, after the introduction of IFRS when regressing returns on earnings per share. However, when using a regression of stock prices on earnings per share, both countries show an increase in value relevance of earnings after the introduction of IFRS. Conditional conservatism has declined in the post-IFRS time period in France but not in Germany. The results reveal that there is a negative relationship between conditional conservatism and value relevance of earnings in Germany in the post-IFRS time period. This does not seem to be the case in France. However, the results should be interpreted with care due to the small sample size.