International Financial Reporting Standards, board governance, and accounting quality

2016 ◽  
Vol 24 (4) ◽  
pp. 474-497 ◽  
Author(s):  
Krismiaji ◽  
Y. Anni Aryani ◽  
Djoko Suhardjanto
Keyword(s):  
Financial Reporting ◽  
Information Quality ◽  
Accounting Information ◽  
Positive Association ◽  
Faithful Representation ◽  
Board Governance ◽  
Accounting Quality ◽  
Content Type ◽  
Ifrs Adoption ◽  
Accounting Information Quality

Purpose The purpose of this paper is to discuss empirical research examining the impact of International Financial Reporting Standard (IFRS) adoption and board governance on the accounting quality, in terms of relevance and faithful representation. Design/methodology/approach The research uses a sample of 454 observations of publicly listed companies on the Indonesian Stock Exchange for the fiscal year that ends on December 31, 2008 through 2011. Relevance is measured by predictive value, whereas faithful representation is measured by absolute discretionary accrual as an inverse measure. Board governance is measured by the board of commissioner score whereas IFRS adoption is measured by the percentage of IFRS adopted. The data used in this study are obtained both from Indonesian Capital Market Directory, Indonesian Stock Exchange database, and from company annual reports. Findings This research found evidence of a positive association of IFRS adoption on the relevance of accounting information quality. With respect to faithful representation, this study proves a positive association after IFRS adoption. This research also found that board governance has a positive impact on accounting information quality after IFRS adoption both in relevance and faithful representation. This result is in line with investor’s expectations that fair value IFRS adoption enhances the relevance of accounting information. Originality/value This study provides further evidence on the effect of IFRS adoption and board of governance on accounting information quality using data from Indonesia. Moreover, this study measures and tests both dimensions of earnings quality which are relevance and faithful representation and portrays a complete story about the quality of earnings. This study uses the qualitative characteristics of accounting information as proxies for accounting quality, so that it enriches the accounting literature about the role of accounting standards in financial reporting quality.

Do globalisation and adoption of IFRS by banks in Africa lead to less earnings management?

2019 ◽  
Vol 17 (2) ◽  
pp. 222-248 ◽  
Author(s):  
Mohammed Amidu ◽  
Haruna Issahaku
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Information Quality ◽  
Accounting Information ◽  
Financial Statements ◽  
International Standards ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Accounting Information Quality ◽  
National Economies

Purpose This paper aims to analyse the implications of globalisation and the adoption of international standards (International Financial Reporting Standards [IFRS]) for accounting information quality. Design/methodology/approach This paper uses a sample of 329 banks across 29 countries leading up to and beyond the implementation of IFRS to test for related hypotheses. Findings First, banks’ financial statements are prepared on the basis of international standards as national economies are integrated when social norms are diffused. Building on these results, the second test suggests that the relatively high-quality earnings among banks in Africa during the period is attributable to the adoption of and interaction of IFRS with globalisation and the strategy of banks to diversify within and across interest and non-interest income. Originality/value The authors investigate how globalisation and the adoption of IFRS affect accounting information quality.

scholarly journals The effect on the BTD of IFRS adoption and the end of the Transitional Tax Regime (RTT) in Brazil

2022 ◽  
Vol 33 (88) ◽  
pp. 96-111
Author(s):  
Claudio Marcio Pereira da Cunha ◽  
Pedro Paulo Furbino Bretas Barros
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Cross Sections ◽  
Information Quality ◽  
Accounting Information ◽  
Negative Relationship ◽  
Taxable Income ◽  
Ifrs Adoption ◽  
Accounting Information Quality ◽  
The Impact

ABSTRACT This paper aimed to evaluate the moderation by variables related to incentives for earnings management (indebtedness, profitability, and size) over the effect of the change in standards (accounting or tax) on the book-tax differences (BTD). The end of the Transitional Tax Regime (RTT) enables us to evaluate the symmetry between the divergence and reconvergence of the accounting and tax standards, helping to identify the moderating effect of characteristics such as size, leverage, and profitability over the use of the discretion allowed by the International Financial Reporting Standards (IFRS). Studying the effects of changes in the standards contributes to understanding how they affect accounting information quality, particularly when we observe symmetrical movements of divergence of the accounting and tax standards, such as IFRS adoption, and of reconvergence, with the end of the RTT. The analysis conducted enables us to separate effects of divergence between the tax and accounting standards from the innovations introduced by the IFRS. An understanding of the effect of the standard over accounting information quality contributes to the quality of the work of financial analysts, tax authorities, and regulators. Event studies are conducted to evaluate the effect of IFRS adoption, as well as the end of the RTT, over the BTD (a proxy for earnings management), in cross sections of companies. We use explanatory variables related to incentives to manage book and taxable income (indebtedness, profitability, and size), which could explain the ambiguity of the results in the literature. The article provides evidence that the indebtedness and size of companies influence the effect of IFRS adoption, as well as of the end of the RTT. We observed a negative relationship of indebtedness and size with the impact of changes in standards over differences between book and taxable income (BTD).

scholarly journals IFRS Adoption Impact On Financial And Accounting Information Quality: An Exploratory Study On Moroccan Petroleum And Gas Sector

2016 ◽  
Vol 6 (1) ◽  
pp. 337
Author(s):  
Anass Cherti ◽  
Houria Zaam
Keyword(s):  
Financial Reporting ◽  
Information Quality ◽  
Academic Research ◽  
Accounting Information ◽  
Stock Exchanges ◽  
Financial Reporting Standards ◽  
Financial Variables ◽  
Ifrs Adoption ◽  
Accounting Information Quality ◽  
The Impact

<p class="ber"><span lang="EN-US">The balance of <em>International Financial Reporting Standards</em> (IFRS), after ten years of their implementation, has reflected a positive perception of its impacts on the function “finance and accounting” of companies and issuers. Those companies and issuers observe, in a large majority that the transition to IFRS has increased the quality and the homogeneity of the information produced and the rapidity of their establishment. Unfortunately in academic research, such studies remains not clear as most publications front IFRS adoption impact in general manner which concern all sectors at the same study.</span></p><p class="ber"><span lang="EN-US">The purpose of this article is to present the results of an empirical study of three petroleum and gas companies listed in the <em>Casablanca Stock Exchanges</em> (CSE), to measure the impact of the IFRS adoption on financial and accounting information quality in Moroccan petroleum and gas sector.</span></p><p class="ber"><span lang="EN-GB">The released results show that this impact is positive for the petroleum and gas sector and the majority of the accounting and financial variables of this sector under IFRS dependents on those variables under the General Standardization Code of Morocco (GSCM). </span></p>

scholarly journals Relationship between the application of IFRS and the accounting information quality in Jordan

2020 ◽  
Vol 17 (4) ◽  
pp. 111-120
Author(s):  
Qasim Ahmad Alawaqleh
Keyword(s):  
Financial Reporting ◽  
Trading Volume ◽  
Information Quality ◽  
Stock Exchange ◽  
Accounting Information ◽  
Financial Reporting Standards ◽  
Industrial Companies ◽  
Accounting Information Quality ◽  
Independent Variable ◽  
The Relationship

The study aimed to find out the relationship between the application of international financial reporting standards (IFRS) and the accounting information quality (AIQ) in Jordan. The research data was collected from 59 industrial companies listed on the Amman Stock Exchange (ASE) between 2010 and 2018. Panel data was used to measure an independent variable (the application of IFRS), and a questionnaire (a 5-point Likert scale) was applied to measure a dependent variable (AIQ). Multiple regression was used to test hypotheses. The study concluded that the application of IFRS in terms of earnings management and trading volume had a positive relationship with AIQ. Finally, the study recommended validating the transparency of financial reporting to improve the efficiency of the Jordanian financial market.

scholarly journals THE IMPACT OF BIG DATA ANALYTICS ON IMPROVING FINANCIAL REPORTING QUALITY

2020 ◽  
Vol 4 (03) ◽  
Author(s):  
Nagat Mohamed Marie Younis
Keyword(s):  
Big Data ◽  
Financial Reporting ◽  
Data Analytics ◽  
Information Quality ◽  
Accounting Information ◽  
Big Data Analytics ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Accounting Information Quality ◽  
The Impact

Purpose – The current study aims to clarify the importance of big data analytics and its role in changing the accounting profession and the roles of accountants, in addition to testing the impact of big data analytics on improving financial reporting quality in the Saudi environment. Design/ methodology/ approach – To achieve the study's goals and validate hypotheses, relevant previous literature and research are referred. Also, a field study is conducted by distributing a questionnaire of (154) individual academics, financial analysts, accountants, and experts in the field of analyzing big data in the Kingdom of Saudi in 2019. Data are analyzed by using the program of Statistical Package for Social Science (SPSS 17.0). Findings – The study concluded that although business organizations face several challenges when analyzing data, big data analytics has a significant role in achieving high competitiveness for institutions, improving the accounting information quality, providing appropriate information that helps in rationalizing decisions within the economic unit, and providing future information affecting stakeholder's decisions. The study also has proved that there is a statistically significant effect of big data analytics on improving the quality of accounting information, as big data analytics clearly affects the characteristics of the accounting information quality, positively affecting the quality of financial reports. Originality/ Value – Originality/ Value – The analytics of big data is one of the most important topics where it positively affects the improvement of accounting information quality, which reflects on financial reporting quality. Hence, academics and institutions should pay attention to this topic and follow their new ideas. The present study is one of the first studies that deal with this topic and examine the relationship between big data analytics and the characteristics of accounting information which positively affecting financial reporting quality.

Do audit efforts increase the future equity value of client firm?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sang Ho Lee ◽  
Seung Uk Choi ◽  
Ji Yeon Ryu
Keyword(s):  
Value Creation ◽  
Stock Return ◽  
Information Quality ◽  
Positive Association ◽  
Accounting Quality ◽  
Content Type ◽  
Mediation Analyses ◽  
Audit Failure ◽  
Equity Value ◽  
Portfolio Return

Purpose The purpose of this study is to examine the association between additional audit efforts and clients’ future equity value. The study hypothesizes that auditors’ additional audit efforts directly increase clients’ stock return performance. Additionally, this study expects that the additional audit effort lowers the likelihood of audit failure and improves accounting information quality, thereby indirectly increasing clients’ future equity return performance. Design/methodology/approach The regression and portfolio return tests are conducted using observations from 2003 to 2016. This study uses the abnormal audit hours as a proxy for additional audit effort using mandatorily disclosed audit hour data from Korean listed firms. The study also conducts mediation analyses to examine the causal intermediate steps that link audit effort to client equity return performance. Findings The paper documents a significant and positive association between abnormal audit hours and clients’ subsequent years’ stock return performance and Tobin’s Q. This finding is accentuated for clients audited by Big N auditors or with greater demand for superior audit service. This finding is robust after controlling for various proxies of accounting quality. The portfolio return tests also find evidence that investors cannot fully perceive the value of audit efforts. A battery of additional tests does not alter the main findings. Practical implications The results provide implications for investors and policymakers by emphasizing the importance of audit efforts in value-creation. Moreover, this study’s findings suggest that auditors’ assurance, insurance and information roles are all the important drivers of this value-creation. Originality/value This study highlights a prominent feature of audit effort that enhances the value of auditees.

scholarly journals Libya’s IAS/IFRS Adoption and Accounting Quality: What Lessons from the European Union Experience

2014 ◽  
Vol 4 (1) ◽  
pp. 118 ◽  
Author(s):  
Najeb Masoud
Keyword(s):  
Financial Reporting ◽  
Stock Price ◽  
Accounting Information ◽  
Financial Accounting ◽  
Future Research ◽  
The European Union ◽  
Accounting Quality ◽  
Ifrs Adoption ◽  
Accounting Reports

This study provides a review of the literature on adoption of IAS/IFRS in Libya, the time the IFRS standards decision is made in EU countries and the time IAS/IFRS adoption becomes undertaking in Libyan economy. The adoption of IAS/IFRS in Europe on the quality of financial reporting is an example of accounting standardisation among countries with different institutional frameworks and implementation rules. Impacts of this adoption in Libya will gain many benefit include the improve quality of financial reporting, less earnings management, more comparability, and provide more reliable, accurate, transparency, and high relevance for stock price determination of financial accounting information. These findings could be fruitful and helpful for outside users of accounting reports and also for regulators and legislators in their attempts to constrain the incidence of earnings accounting practises and to enhance the quality of accounting information. To explore the relevance (applicability) of international accounting standards to developing countries such as Libya is a topic of significant interest amongst disclosure (non-accounting information) users. This is a key subject for standard setting purposes as IAS/IFRS have been adopted in many different nations all over the world, and many others are likely to adopt them in the near future (including, Libya). Finally the main limitations of this study are outlined and opportunities for future research are discussed, particularly in relation to this study’s findings about the requirement to reconsider the usefulness of the relationship between accounting practices and framework adoption of IAS/IFRS in Libya.

Auditor's report, auditor's size and value relevance of accounting information

2020 ◽  
Vol 21 (4) ◽  
pp. 721-739
Author(s):  
Ahmad Abdollahi ◽  
Yasser Rezaei Pitenoei ◽  
Mehdi Safari Gerayli
Keyword(s):  
Financial Reporting ◽  
Firm Size ◽  
Value Relevance ◽  
Accounting Information ◽  
Positive Association ◽  
Alternative Measure ◽  
Policy Makers ◽  
Content Type ◽  
Audit Firm ◽  
Audit Firms

PurposeThe present study sets out to examine the effect of auditor's report and audit firm size on the value relevance of accounting information of the companies listed on the Tehran Stock Exchange during the years 2008–2017.Design/methodology/approachThe study includes a sample of 1,530 firm-year observations drawn from the listed companies, and the research hypotheses were analyzed using multivariate regression model based on panel data.FindingsThe findings reveal that auditor's report and audit firm size are positively and significantly correlated with two indicators of the value relevance of accounting information including value relevance of earnings and book value per share. Also our results exhibit robustness to the alternative measure of auditor's attributes.Research limitations/implicationsAs far as we know, this is the first study to analyze the association between auditor's attributes and value relevance of accounting information in emerging capital markets, thereby generating certain implications for investors, managers, capital market policy makers and audit profession regulators in general and those in emerging markets in particular.Practical implicationsOur findings have implications for policy makers, regulators, managers and investors. Our evidence on the positive association between auditor's size and value relevance of accounting information should help policy makers and regulators which they improve value relevance of accounting information and financial reporting by integrating small audit firms and setting up larger audit firms.Originality/valueA rise in the value relevance of accounting information deserves further attention while drawing investment, selling the stocks of existing firms and increasing investor's decision-making ability. The way how auditor's attributes can promote the value relevance of accounting information is still open to new research.

IFRS and value relevance: evidence based on Canadian adoption

2016 ◽  
Vol 12 (2) ◽  
pp. 136-160 ◽  
Author(s):  
Oliver N. Okafor ◽  
Mark Anderson ◽  
Hussein Warsame
Keyword(s):  
Empirical Evidence ◽  
Financial Reporting ◽  
Value Relevance ◽  
Accounting Information ◽  
Sensitivity Analyses ◽  
Evidence Based ◽  
Content Type ◽  
Ifrs Adoption ◽  
The Us ◽  
Us Gaap

Purpose – The purpose of this paper is to investigate whether financial information prepared and disclosed under International Financial Reporting Standards (IFRS) has incremental value relevance vs information prepared under generally accepted accounting principles (GAAP) in Canada. Design/methodology/approach – The authors employ a difference in differences methodology and estimate value relevance using: first, the adjusted R2 of regressions of stock price on book value and earnings; second, the adjusted R2 of regressions of stock returns on earnings and changes in earnings; and third, a time series incremental association return estimation. The authors use multiple models including a model similar to the Ohlson (1995) model and a modified Balachandran and Mohanram (2011) model to investigate value relevance in the period 2008-2013. Findings – The authors provide empirical evidence, based on unique Canadian environment, that accounting information prepared and disclosed under IFRS exhibits higher price and returns value relevance than accounting information prepared previously under local GAAP. Sensitivity analyses and yearly trends regressions produce collaborating evidence. Originality/value – The study provides early empirical evidence that value relevance increases in mandatory IFRS adoption, based on unique Canadian adoption. The Canadian adoption is unique because Canada: first, is the first G7 non-European country to adopt IFRS; second, had pursued a dual strategy of harmonizing with the US GAAP while supporting IFRS convergence; third, provided information environment that mitigates the problems associated with measuring the effects of IFRS adoption in the European countries where IFRS or its predecessor – international accounting standards – had permeated the reporting environment prior to the mandatory adoption in 2005; and fourth, allowed firms listed on the US exchanges to continue to use or adopt the US GAAP for financial reporting and thus, provided a group of benchmark firms drawn from the same social-political and economic environment as the treatment firms. The study clarifies prior inconsistent results from European samples.

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