Financial Reporting Quality - Before and After IFRS Adoption Using NiCE Qualitative Characteristics Measurement

The International Accounting Standards Board (IASB) in its objectives and preamble, presume that IFRS adoption and perceived compliance to regulatory framework is associated with increased financial reporting quality. Based on these assumptions, this desktop study reviewed several documents to determine whether the IFRS adoption has led to increased financial reporting quality in Zimbabwe. The researchers reviewed literature on how the IAS/IFRS and regulations affect the financial reporting quality of listed companies. The factors around IFRS adoption were identified (mandatory, voluntary and convergence) and discussed in relation to the financial reporting quality. Evidence from previous studies conducted in line with this same issue shows that there is no conclusive evidence on how IFRS and regulations affect the financial reporting quality. Issues to be addressed in further studies include the importance of financial statements prepared under IFRS framework and the importance of compliance with accounting and auditing requirements.

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The Influence of IFRS Adoption

10.31219/osf.io/drxue ◽

2021 ◽

Author(s):

Feng C. Xu

Keyword(s):

Financial Reporting ◽

Reporting Quality ◽

Financial Reporting Quality ◽

Main Question ◽

Accounting Disclosure ◽

Ifrs Adoption ◽

The Subject

This paper aims to present a thorough theoretical coverage to the subject studied by focusing on the concepts in companies as general, and accounting disclosure, test the selected hypothesis, obtain satisfying results to the research in an appropriate manner that consists with the problem studied and hypotheses, and find a reasonable answer to main question that is (Does IFRS adoption in the large banks improve financial reporting quality?) based on the main hypotheses which are financial reporting quality has not improved after IFRS adoption in the large banks, and financial reporting quality has improved after IFRS adoption in the large banks.

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IFRS adoption, financial reporting quality and cost of capital: a life cycle perspective

Pacific Accounting Review ◽

10.1108/par-08-2016-0073 ◽

2019 ◽

Vol 31 (3) ◽

pp. 497-522 ◽

Cited By ~ 3

Author(s):

Ahsan Habib ◽

Md. Borhan Uddin Bhuiyan ◽

Mostafa Monzur Hasan

Keyword(s):

Life Cycle ◽

Financial Reporting ◽

Cost Of Capital ◽

Reporting Quality ◽

Financial Reporting Quality ◽

Cost Of Equity ◽

Content Type ◽

Ifrs Adoption ◽

Life Cycle Stages ◽

The Impact

Purpose This paper aims to investigate the impact of International Financial Reporting Standards (IFRS) adoption on financial reporting quality and cost of equity. The paper further investigates whether such association varies at different life cycle stages. Design/methodology/approach This paper follows the methodologies of DeAngelo et al. (2006) and Dickinson (2011) to develop proxies for the firms’ stages in the life cycle. Findings Using both pre- and post-IFRS adoption period for Australian listed companies, the paper finds that financial reporting quality reduced and cost of equity increased because of the adoption of IFRS. The paper further evidences that financial reporting quality in the post-IFRS period increased cost of equity. Finally, the paper finds that mature firms produce a better quality of earnings, which result in lower cost of capital. The results indicate that a mature firm was benefited because of the adoption of IFRS. Originality/value The finding of this research is useful to the regulators and practitioners to understand the widespread benefit of IFRS adoption.

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Financial reporting quality and share price movement-evidence from listed companies in Bangladesh

Journal of Financial Reporting and Accounting ◽

10.1108/jfra-01-2019-0019 ◽

2020 ◽

Vol 18 (3) ◽

pp. 425-458

Author(s):

Md. Mamunur Rashid

Keyword(s):

Financial Reporting ◽

Stock Exchange ◽

Reporting Quality ◽

Share Price ◽

Financial Reporting Quality ◽

Annual Reports ◽

Developing Economy ◽

Price Movement ◽

Content Type ◽

Qualitative Characteristics

Purpose The purpose of this study is to examine the effect of financial reporting quality (FRQ) on share price movement (SPM) of listed companies in an emerging and developing economy – Bangladesh. Design/methodology/approach The study analyzed 296 annual reports for the year 2015 and 2016 in examining the effect of FRQ on SPM. Ordinary least squares (OLS) regression model is used to examine the hypothesized relationship among the variables. A modified version of Lang et al. (2003) has been adopted in measuring the SPM. FRQ is measured using the qualitative characteristics approach as defined by the International Financial Reporting Standard Framework and used by Beest et al. (2009) and Braam and Beest (2013). Findings The study finds a positive association (though not significant statistically) between the FRQ and SPM in the country’s leading stock exchange (Dhaka stock exchange). Furthermore, the effect of enhancing quality on SPM is found to be stronger as compared to fundamental quality. Majority of the FRQ constructs demonstrate an improvement in the quality score in the year 2016 as compared to 2015 except for relevance. Research limitations/implications The key limitation of the study is that it focuses only on two years (2015 and 2016) annual reports data in measuring FRQ and its effect on SPM. Originality/value The study uses qualitative characteristics approach in measuring the FRQ and to examine its effect on SPM using the context of an emerging and developing economy – the case of Bangladesh.

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The Impact of Mandatory IFRS Adoption on Audit Fees: Theory and Evidence

The Accounting Review ◽

10.2308/accr-50223 ◽

2012 ◽

Vol 87 (6) ◽

pp. 2061-2094 ◽

Cited By ~ 131

Author(s):

Jeong-Bon Kim ◽

Xiaohong Liu ◽

Liu Zheng

Keyword(s):

Financial Reporting ◽

Reporting Quality ◽

Audit Fees ◽

Data Availability ◽

Financial Reporting Quality ◽

Financial Reporting Standards ◽

Ifrs Adoption ◽

Audit Fee ◽

European Union Countries ◽

The Impact

ABSTRACT: This study examines the impact of International Financial Reporting Standards (IFRS) adoption on audit fees. We first build an analytical audit fee model to analyze the impact on audit fees for the change in both audit complexity and financial reporting quality brought about by IFRS adoption. We then test the model's predictions using audit fee data from European Union countries that mandated IFRS adoption in 2005. We find that mandatory IFRS adoption has led to an increase in audit fees. We also find that the IFRS-related audit fee premium increases with the increase in audit complexity brought about by IFRS adoption, and decreases with the improvement in financial reporting quality arising from IFRS adoption. Finally, we find some evidence that the IFRS-related audit fee premium is lower in countries with stronger legal regimes. Our results are robust to a variety of sensitivity checks. Data availability: Data are available from public sources identified in the paper.

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THE INITIAL IMPLEMENTATION OF ACCRUAL BASED ACCOUNTING, THE EFFECT ON PERFORMANCE AND FINANCIAL REPORTING QUALITY AT LOCAL GOVERNMENTS IN INDONESIA

Ekspansi: Jurnal Ekonomi, Keuangan, Perbankan dan Akuntansi ◽

10.35313/ekspansi.v11i1.1326 ◽

2019 ◽

Vol 11 (1) ◽

pp. 13

Author(s):

Rindu Rika Gamayuni

Keyword(s):

Financial Performance ◽

Financial Reporting ◽

Local Governments ◽

Reporting Quality ◽

Financial Reporting Quality ◽

Fiscal Year ◽

Accounting Standard ◽

Government Accounting ◽

Before And After

Abstract: In Indonesia local government, accrual based Government Accounting Standard (GAS) was started to be mandatorily applied in 2015, so this research aims to investigate to what extent the role of accrual GAS implementation toward quality of financial reporting and financial performance especially at local governments. Population of this study is Local Governments of districts/cities in Indonesia for Fiscal Year 2014 and Fiscal Year 2015, as many as 542 local governments (before and after the implementation of accrual base). Sampling method uses probability sampling which is cluster sampling. In this case, the population is divided based on 34 province clusters, so the number of sample obtained is 242 local governments of districts/cities in Indonesia. The hypothesis testing uses paired t test. The object of research is the financial reporting quality and financial performance. The results of this study provide empirical evidence that there is an increase in the quality of financial reporting after the application of accrual-based accounting at local governments in Indonesia, but have not proven the existence of the increased financial performance. There is no differences in financial performance before and after accrual based accounting implementation at local governments in Indonesia. This hyphothesis was not supported due to the application of accrual basis accounting is still in the early stages of implementation (1 year) that still have constraints in limited human resources competencies, necessary adaptations or adjustments in the process of change. Local governments in Indonesia must apply accrual based accounting because it is proven that it increases financial report quality. However, the system implementation in the beginning period found many obstacles so it needs continuous adjustment and learning in order to reach desirable goal. There is still a debate on how important is the implementation or adoption of accrual IPSAS in many countries, including Indonesia. In Indonesia, the implementation of accrual based Government Accounting Standard (SAP/GAS) is new mandatory since 2015. The result of this research will give contribution to the theory, that there is significant influence of implementation accrual based GAS to financial reporting quality, but no significant increase in financial performance (efficiency and effectiveness) at local government. Therefore, this result study will be used to determine related policies about the implementation of accrual based GAS. Keywords: Accrual Based Accounting, Financial Reporting Quality, Financial Performance, Government

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AN INVESTIGATION ON THE EFFECT OF AUDIT COMMITTEE ON FINANCIAL REPORTING QUALITY IN PRE AND POST IFRS ADOPTION: EVIDENCE FROM MALAYSIAN COMPANIES

Humanities & Social Sciences Reviews ◽

10.18510/hssr.2020.824 ◽

2020 ◽

Vol 8 (2) ◽

pp. 25-35

Author(s):

Citrawati Jatiningrum ◽

Fauzi ◽

Rita Irviani ◽

Mujiyati ◽

Shahanif Hasan

Keyword(s):

Earnings Management ◽

Empirical Evidence ◽

Financial Reporting ◽

Audit Committee ◽

Audit Quality ◽

Reporting Quality ◽

Financial Reporting Quality ◽

Ifrs Adoption ◽

Significant Difference ◽

The Relationship

Purpose of study: This study sought to investigate the effect of the audit committee on Financial Reporting Quality (FRQ), explicitly focuses on the period pre- and post-mandatory IFRS adoption in Malaysia. The Financial Reporting Quality in this study proxied by earnings management. Malaysian. Methodology: The sample study has covered 81 listed companies on Bursa Malaysia, with 567 observations, which examined the time of 2009 to 2015. The relationship was analyzed by statistical multiple regression linear methods and also examined the significance of differences between pre and post IFRS adoption by paired sample t-test. Result: The main finding reveals that the relationship between the audit committee and financial reporting quality after IFRS adoption in Malaysia has more significant. However, empirical evidence showed that the post period of mandatory IFRS evidently no significant difference level of earnings management practice. This result indicates that the IFRS adoption cannot reduce managerial discretion yet and the possibility for EM manipulation for Malaysian companies. Implication/Application: This finding has critical implications for regulators and policymakers, that the consequences of IFRS adoption do not increase the quality of financial reporting when EM practices still continue in the different forms. Novelty/Originality of this study: This study gives empirical evidence that there are differences in relationship level between audit quality and earnings management in the period before and after IFRS mandatory adoption in Malaysia companies.

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The Qualitative Characteristics of Accounting Information, Earnings Quality, and Islamic Banking Performance: Evidence from the Gulf Banking Sector

International Journal of Financial Studies ◽

10.3390/ijfs8020030 ◽

2020 ◽

Vol 8 (2) ◽

pp. 30

Author(s):

Ibrahim Elsiddig Ahmed

Keyword(s):

Financial Reporting ◽

Positive Relationship ◽

Banking Sector ◽

Earnings Quality ◽

Negative Relationship ◽

Reporting Quality ◽

Financial Reporting Quality ◽

Annual Reports ◽

Significant Positive Relationship ◽

Qualitative Characteristics

The study aims to operationalize financial reporting quality in terms of the qualitative characteristics (QCs) as stated by the Accounting and Auditing Organization of Islamic Financial Institutions (AAOIFI) standards, as well as to investigate their association with earnings quality (EQ) and banking performance. The study uses secondary data extracted from DataStream to operationalize and measure the financial reporting quality in the annual reports of 25 out of the 27 Islamic banks in the Gulf Council Countries (GCC) for a 5-year period (2014–2018), meaning 125 annual reports were used. The study applies a manual content analysis to the annual reports to score all the items of QCs and operationalizes 25 measurement items that represent the six QCs. All items use 5-point Likert-type scales to compute the sub-score and the overall index through the Neural Network System. The findings of the model paths show a significant positive relationship between EQ and most of the QCs. The first hypothesis is partially accepted as there is a positive relationship between EQ and relevancy, reliability, prudence and general quality; however, there is no significant relationship between EQ and understandability and there is a significant negative relationship between EQ and comparability. Moreover, the study finds a significant positive relationship between EQ and ROA on one hand and EQ and ROE on the other hand (p-value = 0.00), meaning the second hypothesis is supported.

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The Role of IFRS on Financial Reporting Quality and Global Convergence: A Conceptual Review

International Business and Accounting Research Journal ◽

10.15294/ibarj.v3i1.65 ◽

2019 ◽

Vol 3 (1) ◽

pp. 67

Author(s):

Auwalu Musa

Keyword(s):

Earnings Management ◽

Financial Reporting ◽

Reporting Quality ◽

Financial Reporting Quality ◽

Accounting Quality ◽

Ifrs Adoption ◽

The World ◽

Timely Loss Recognition

This study examines the role of International Financial Reporting Standards on financial reporting quality and the global convergence. The IFRS adoption is already an issue of global relevance across countries of the world due to the quest for uniformity, reliability and comparability of financial statements of companies. The adoption of IFRS in Europe is an example of accounting quality across-borders with different institutional frameworks and enforcement rules. This allows investigating whether, and to what extent accounting regulation per se can affect the quality of financial reporting and leads to convergence in financial reporting. Specifically, the study review how the change in the recognition and measurement of firms operating accrual item, the loan loss provision, affects income smoothing behaviour and timely loss recognition. The study found that the IFRS convergence reduces the scope for earnings management, is related to more timely loss recognition and leads to more value relevant accounting measures. Thus, the study reviews background and guidance on the change in financial reporting quality following extensive IFRS adoption around the world countries. The study found that a difference in accounting quality is related to country’s overall infrastructure setting. The study also highlights the importance of investor protection for financial reporting quality and the need for regulators to design mechanisms that limit managers' earnings management practice. The study found from different literatures that the adoption of IFRS leads to higher quality of accounting numbers and improve foreign direct investment across countries.

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Voluntary IFRS Adoption by Unlisted European Firms: Impact on Earnings Quality and Cost of Debt

The International Journal of Accounting ◽

10.1142/s1094406020500134 ◽

2020 ◽

Vol 55 (03) ◽

pp. 2050013

Author(s):

Mara Cameran ◽

Domenico Campa

Keyword(s):

Financial Reporting ◽

Positive Impact ◽

Reporting Quality ◽

Financial Reporting Quality ◽

Cost Of Debt ◽

Financial Reporting Standards ◽

Ifrs Adoption ◽

The Cost ◽

The Impact ◽

Unlisted Firms

This paper investigates the impact of the voluntary adoption of International Financial Reporting Standards (IFRS) by unlisted firms on both their financial reporting quality and cost of debt. Using a large international sample of unlisted EU companies for which the choice of IFRS is voluntary, we find that IFRS adoption has a positive impact on financial reporting quality and results in a decrease in the cost of debt. In addition, unlisted firms adopting IFRS are more likely to be acquired or go public in the years subsequent to the adoption, relative to other unlisted firms. We document a tangible benefit of voluntary IFRS adoption by unlisted firms.

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