FRS 12: An Inter-Industry Study of Its Impact on Share Prices
Julianna Jetty and Jo Danbolt
Financial Reporting Standard No. 12, Provisions, Contingent Liabilities and Contingent Assets (FRS 12) became mandatory in March 1999. Although the impact of FRS 12 is perhaps likely to be most pronounced for companies in extractive industries, the standard may also affect other UK companies, particularly those with high levels of provisions. A study of the impact of FRS 12 is especially important in light of the recent movement towards the use of international financial reporting standards for reporting purposes in Europe as well as in many other countries around the world. Consequently, this paper extends prior research by assessing the impact on company value of the introduction of the standard on provisions and contingencies not only on extractive firms, but also on UK firms in other industries.
FRS 12: An Inter-Industry Study of Its Impact on Share Prices. Jetty, Julianna and Danbolt, Jo, Fall/Winter 2006, pp. 1‑22.