scholarly journals Measurement of earnings management before and after applying IFRSS using jones' modified method an applied research in a sample of banks listed in the Iraqi stock exchange

2018 ◽  
Vol 6 (2) ◽  
pp. 56
Author(s):  
Dr Sabeha Barzan Farhood
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Applied Research ◽  
Stock Exchange ◽  
Accounting System ◽  
Financial Reporting Standards ◽  
Modified Method ◽  
Quality Of Accounting Information ◽  
Before And After

In the year 2016, all commercial banks in Iraq were obliged to switch from the application of the local unified accounting system to the application of International Financial Reporting Standards (IFRSs) to improve the quality of accounting information and make it relevant for decision-making. The objective of the research is to measure earnings management in a number of banks which applied IFRSs at the end of the financial year 2016 through their application on a sample of banks for the years (2012-2013, 2014, 2015, 2016). The results were compared with the measurement of earnings management under the application of the unified accounting system (before the adoption of IFRSs) and after the application of the (IFRSs). The researcher concluded that the percentage of earnings management in the years in which the banks applied the unified accounting system is very close to its percentage in the case of the application of IFRSs, which shows that the application of IFRSs did not change the percentage of earnings management in banks.  

Developments in Earnings Management Practices in the IFRS Perspective

2019 ◽  
pp. 274-288
Author(s):  
Oguzhan Carikci ◽  
Mahmut Sami Ozturk
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Management Practices ◽  
Stock Exchange ◽  
Market Value ◽  
Legal Framework ◽  
Accounting System ◽  
Financial Reporting Standards ◽  
Public Company ◽  
Istanbul Stock Exchange

Financial statements are an important tool when it comes to determining the level of success of a company's management and setting its market value. Nevertheless, company managers may sometimes try to reflect the company's financial results differently. Strategic methods, used by the company to deliberately change the earnings they gain by using the flexibility provided by the accounting system, are called earnings management practices. This chapter examines the examples of a public company that is traded on the Istanbul Stock Exchange for the purpose of determining earnings management practices under International Financial Reporting Standards (IFRS). Given the results of the study, it is possible to say from the earnings management practices that the company only benefited from those in the legal framework.

scholarly journals Earning Management Analysis before and after Implementation of International Financial Reporting Standards (IFRS): Empirical Study of Automotive and Components Companies Registered on the IDX

2019 ◽  
Vol 1 (01) ◽  
pp. 45-56
Author(s):  
I Wayan Wisnu Utama ◽  
Anis Purwanti
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Management Practices ◽  
Stock Exchange ◽  
Financial Statements ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Reporting Standard ◽  
Financial Reporting Standards ◽  
Before And After

  The issue of the application of IFRS as a standard can encourage a decrease in the level of earnings management in a company so that the application of IFRS in financial statements has the purpose of providing reports that are faithful in nature so that the report users are reliable. The purpose of this study is to show a comparison of earnings management practices that occurred before and after the implementation of International Financial Reporting Standards (IFRS) in Automotive and Component companies registered in the Indonesia Stock Exchange (IDX) for the period of 2009-2014. The data used in this study are secondary data in the form of the company’s financial statements. The variables in this study are earnings management before and after IFRS implementation. The sampling method in this study was purposive sampling with a sample of 12 automotive and component companies on the Indonesia Stock Exchange. Discretionary accruals of Modified Jones Model is used to measure the earnings management. The analytical method used for hypothesis testing is Paired Sample T-test, a different test for two paired samples. The results of this study indicate that earnings management in the period after IFRS convergence was different than earnings management in the period before IFRS convergence in Automotive and Component companies. However, IFRS convergence has not guaranteed a decline in earnings management practices in Automotive and Component companies.  Keywords: Earnings Management, International Financial Reporting Standard, Discretionary Accrual

scholarly journals Heterogeneity in earnings quality between different classes of companies after IFRS adoption: evidence from Brazil

2017 ◽  
Vol 28 (73) ◽  
pp. 113-131
Author(s):  
Roberto Black ◽  
Sílvio Hiroshi Nakao
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Value Relevance ◽  
Earnings Quality ◽  
Economic Incentives ◽  
Net Income ◽  
Accounting Earnings ◽  
Ifrs Adoption ◽  
Before And After

ABSTRACT This paper aims to investigate the existence of heterogeneity in earnings quality between different classes of companies after the adoption of the International Financial Reporting Standards (IFRS). IFRS adoption is generally associated with an increase in the quality of financial statements. However, companies within the same country are likely to have different economic incentives regarding the disclosure of information. Thus, treating companies equally, without considering the related economic incentives, could contaminate earnings quality investigations. The case of Brazil is analyzed, which is a country classified as code-law, in which tax laws determined accounting practice and in which IFRS adoption is mandatory. First, Brazilian companies listed on the São Paulo Stock, Commodities, and Futures Exchange (BM&FBOVESPA) were separated into two classes: companies issuing American Depositary Receipts (ADRs) before IFRS adoption and companies that did not issue ADRs until the adoption of IFRS. Then, this second class of companies was grouped, using cluster analysis, into two different subclasses according to economic incentives. Based on the groups identified, the quality of accounting earnings is tested for each class of the companies before and after IFRS adoption. This paper uses timely recognition of economic events, value relevance of net income, and earnings management as proxies for the quality of accounting earnings. The results indicate that a particular class of companies began showing conditional conservatism, value relevance of net income, and lower earnings management after IFRS adoption. On the other hand, these results were not found for the two other classes of companies.

scholarly journals The importance of information upon applying IFRS in financial entities that trade at the Colombian stock market

2019 ◽  
Vol 21 (34) ◽  
pp. 137-152
Author(s):  
Miguel Angel Laverde Sarmiento ◽  
Jorge Fernando Garcia Carrillo ◽  
Juan Carlos Lezama Palomino ◽  
Alejandra Patiño Jacinto
Keyword(s):  
Financial Reporting ◽  
Stock Price ◽  
Stock Exchange ◽  
Regulatory Framework ◽  
General Level ◽  
Market Exchange ◽  
Generally Accepted Accounting Principles ◽  
Financial Reporting Standards ◽  
Before And After ◽  
The Impact

The aim of this research is to determine whether the implementation of the International Financial Reporting Standards (IFRS) in the companies of the financial sector listed on the Colombian Stock Exchange has greater relevance compared to the previous accounting regulatory framework known as Generally Accepted Accounting Principles (GAAP) in Colombia, for the years 2009 to 2016. Taking into account the concept of valorative relevance that indicates that the accounting information is relevant if it affects the stock price reflected in the capital market exchange. To determine this relationship, an adaptation of the model proposed by Ohlson (1995) is used, because it is the most frequently used to measure relevance. The modifications made to the model were to include accounting variables of financial instruments of assets and liabilities to better measure the impact of the IFRS. On a general level, the conclusion is reached that the valorative relevance of financial companies listed on the stock exchange between 2009 and 2016, does not change due to the application of the IFRS. The results are because the regulation that financial companies that are listed on the stock exchange of Colombia are subject to has contributed to the relevance being maintained before and after the application of the new regulatory framework. however, when carrying out the study of the information taking into account only the variables and taking into account the regulations under the IFRS, they present a greater degree of significance.

scholarly journals Political and financial background in board interlocking and earnings management in Brazil

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Cristian Baú Dal Magro ◽  
Roberto Carlos Klann
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Financial Reporting ◽  
Management Practices ◽  
Accounting Information ◽  
Real Earnings Management ◽  
The Political ◽  
Content Type ◽  
Quality Of Accounting Information

Purpose Although board interlocking underlying forces are largely hidden, the purpose of this paper is to provide managers, auditors, analysts, regulators and other stakeholders with sociological board interlocking information considering the different backgrounds of their members. Design/methodology/approach The research sample gathered 1,606 observations from 2010 to 2017. For data analysis, the direct and indirect board interlocking linkages, considering the different backgrounds of board members, established the centrality indicators. Subsequently, the authors used these indicators according to each measured background in the regression models. Findings The results indicate that the political background of board interlocking members is positively related to real earnings management practices, while the financial background has a mitigating effect on such practices. Research limitations/implications The findings suggest that individual skills and interests conveyed across the corporate social network have shaped corporate governance, with distinct impacts on the quality of accounting information. Practical implications The authors conclude that both backgrounds could have implications on agency conflicts, increasing (policy) or reducing (financial) information asymmetry between the company and its various stakeholders, which indicates that the authors must consider sociological and not just economic aspects within corporate governance. Social implications The sociological background of individuals is necessary for the congruence of monitoring mechanisms, and consequently, the quality of accounting information. Originality/value This study examines the influence of the political and financial background of board interlocking members on real earnings management practices in Brazilian publicly traded companies in the International Financial Reporting Standards post-adoption period.

scholarly journals Earnings management to avoid earnings decreases and losses

2021 ◽  
Vol 20 ◽  
pp. e3153
Author(s):  
Verônica de Fátima Santana ◽  
Raquel Wille Sarquis
Keyword(s):  
United States ◽  
Earnings Management ◽  
Financial Reporting ◽  
Reporting Standards ◽  
Working Capital ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Geographical Regions ◽  
The World ◽  
Before And After

This study evaluates the prevalence of earnings management to avoid losses and earnings decreases across the World. This practice was first documented by Burgstahler and Dichev (1997) for United States firms from 1976 to 1987. We replicate their study for a more recent and global sample. Firms that do not seem to manage earnings do avoid reporting earnings decreases, but we found persistent evidence of earnings management to avoid reporting losses. The results are consistent across different geographical regions, countries, and before and after International Financial Reporting Standards (IFRS) adoption. Unlike Burgstahler and Dichev (1997), however, we were not able to find evidence on which components of earnings (cash flow from operations, changes in working capital, or other accruals) firms mainly manage to increase earnings, concluding they likely use a bundle of all these components. Our results are important mainly to financial analysts and general investors, who should be careful in giving good prospects to firms who presented small profits since they are likely small losses artificially managed to look better, a practice widely spread across time and geographical regions among IFRS adopters and non-adopters.

scholarly journals Earnings management to avoid earnings decreases and losses

2021 ◽  
Vol 20 ◽  
pp. e3153
Author(s):  
Verônica de Fátima Santana ◽  
Raquel Wille Sarquis
Keyword(s):  
United States ◽  
Earnings Management ◽  
Financial Reporting ◽  
Reporting Standards ◽  
Working Capital ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Geographical Regions ◽  
The World ◽  
Before And After

This study evaluates the prevalence of earnings management to avoid losses and earnings decreases across the World. This practice was first documented by Burgstahler and Dichev (1997) for United States firms from 1976 to 1987. We replicate their study for a more recent and global sample. Firms that do not seem to manage earnings do avoid reporting earnings decreases, but we found persistent evidence of earnings management to avoid reporting losses. The results are consistent across different geographical regions, countries, and before and after International Financial Reporting Standards (IFRS) adoption. Unlike Burgstahler and Dichev (1997), however, we were not able to find evidence on which components of earnings (cash flow from operations, changes in working capital, or other accruals) firms mainly manage to increase earnings, concluding they likely use a bundle of all these components. Our results are important mainly to financial analysts and general investors, who should be careful in giving good prospects to firms who presented small profits since they are likely small losses artificially managed to look better, a practice widely spread across time and geographical regions among IFRS adopters and non-adopters.

scholarly journals The Impact of International Financial Reporting Standards (IFRS) on Accounting Quality in Malaysia

2019 ◽  
Vol 5 (1) ◽  
pp. 93-104
Author(s):  
Ooi Chee Keong ◽  
Lee Siew Pengb ◽  
Lim Wan Lengc
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Stock Exchange ◽  
Accounting Quality ◽  
Kuala Lumpur ◽  
High Quality ◽  
Quality Reporting ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
The Impact

There are two objectives of this study, first,it is to examine and compare the accounting quality in pre-and post-implementations IFRS from the viewpoint of investors. Second ,is to identify the differences in the accounting quality between the shariah compliant and non-shariah compliant companies in pre-and post-implementations of IFRS. Using  2169 firm-year observations from firms listed on the Bursa Kuala Lumpur Stock Exchange over the period of 2008  to 2016, the result shows that the implementation of MFRS have reduced the firms’ earnings management. However, this study provides new arguments that Shariah-complaints firms in Malaysia do not necessary have greater incentives to report high-quality reporting based on the investor perspectives.  Our evidence thus help to explains the different impact on IFRS adoption on accounting quality in Malaysia and shariah complaint compnaies.

scholarly journals Earnings quality before and after the implementation of PSAK 69

Accounting ◽  
2021 ◽  
pp. 727-734 ◽  
Author(s):  
Naniek Noviari ◽  
I Gusti Ayu Eka Damayanthi ◽  
I Gusti Ngurah Agung Suaryana
Keyword(s):  
Financial Reporting ◽  
Agricultural Sector ◽  
Stock Exchange ◽  
Earnings Quality ◽  
Fair Value ◽  
Cross Sectional ◽  
Current Period ◽  
Before And After ◽  
Earnings Response

PSAK 69 Agriculture regulates the accounting treatment of agricultural activities in Indonesia. The measurement of biological assets is the most important part of the arrangement of PSAK 69. PSAK 69 deals with biological assets measured at fair value less costs to sell at the beginning and end of the reporting period. Characteristics of growing biological assets will have an impact on the growth in fair value of assets, so there will be differences in fair value at the beginning and end of the financial reporting period. The difference in fair value of biological assets, whether realized or not, is recognized as gain in the current period. This will have an impact on the quality of the company's earnings. This study aims to examine differences in earnings quality before and after the implementation of PSAK 69 in agricultural sector companies listed on the Indonesia Stock Exchange. The research was conducted on 14 agricultural companies listed on the Indonesia Stock Exchange in the 2016-2019 observation period. Earnings quality is measured by the earnings response coefficient. Earnings response coefficients are estimated using the firm specific coefficient model (FSCM) and pooled cross-sectional regression model (CSRM) methods. This study measures the quality of earnings before and after the application of PSAK 69. The quality of earnings before and after the application of PSAK 69 is tested by a paired two-sample t-test. The results of this study found no difference in earnings quality before and after the application of PSAK 69.

scholarly journals PENGARUH KONVERGENSI IFRS DAN KEPEMILIKAN ASING TERHADAP TIMELY LOSS RECOGNITION

2018 ◽  
Vol 1 (2) ◽  
pp. 92
Author(s):  
Liliek Nur Sulistiyowati ◽  
Robby Sandhi Dessyarti ◽  
Adi Gunanto
Keyword(s):  
Financial Reporting ◽  
Audit Quality ◽  
Control Variable ◽  
Foreign Ownership ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Quality Of Accounting Information ◽  
Before And After ◽  
Timely Loss Recognition

<em>This research is intended to analyzeinfluence of convergence of International Financial Reporting Standard (IFRS) and foreign ownership to Timely Loss Recognition (TLR) at trade and service company listed in Bursa Efek Indonesia (BEI). This research comparing between before and after the IFRS convergence of the level loss recognition and see whether there is an increase in therecognition of a loss on time with the presence of foreign ownership within the company.Researchers used four control variables, namely firm size, profitability, leverage, and audit quality. TLR is measured by the ratio of Large Negative Net Income.This research used purposive sampling method at companies listed on BEI from 2014 until 2016, there are13 samples and tested by using linear regression.The results of this research indicate thatthere was an influence between IFRS convergence and foreign ownership of TLR. Control variable, leverage variable and audit quality indicatesignificant influence. This research has once again indicatethat the application of IFRS has an impact on improving the quality of accounting information and the demand for timely recognition of losses in less than stackholder financial statements.</em>

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