scholarly journals International Financial Reporting Standards and Earnings Management in Latin America

2016 ◽  
Vol 20 (3) ◽  
pp. 368-388 ◽  
Author(s):  
Alex Augusto Timm Rathke ◽  
Verônica de Fátima Santana ◽  
Isabel Maria Estima Costa Lourenço ◽  
Flávia Zóboli Dalmácio
Keyword(s):  
United States ◽  
Latin America ◽  
Earnings Management ◽  
Latin American ◽  
Financial Reporting ◽  
The United States ◽  
Reporting Standards ◽  
Anglo Saxon ◽  
Financial Reporting Standards ◽  
Cross Listing

Abstract This study analyzes the level of earnings management in Latin America after the adoption of the International Financial Reporting Standards (IFRS) and analyzes the role of cross-listing in the United States. The literature on earnings management in less developed countries is still under construction, and few studies focus on this issue, especially with respect to Latin America, despite its relevant role in the global economy. This paper fills this gap in the literature as it analyzes the level of IFRS earnings management regarding the first and main Latin American countries applying IFRS (Brazil and Chile), when compared to the main Anglo-Saxon countries with IFRS tradition (United Kingdom and Australia), and with the main Continental European economies (France and Germany). The results show that Latin American firms present a higher level of earnings management than Continental European and Anglo-Saxon firms, and this opportunistic behavior remains significant when only global players with cross-listing in the United States are analyzed. Thus, even with a unique set of high quality accounting standards (IFRS) and strong reporting incentives, countries' specific characteristics still play an important role in the way IFRS is implemented in each country.

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.

Accounting Quality, Earnings Management and Cross-Listings: Evidence from China

2012 ◽  
Vol 15 (02) ◽  
pp. 1250009 ◽  
Author(s):  
Li Li Eng ◽  
Ying Chou Lin
Keyword(s):  
United States ◽  
Hong Kong ◽  
Earnings Management ◽  
Financial Reporting ◽  
Reporting Quality ◽  
The United States ◽  
Good News ◽  
Chinese Firms ◽  
Cross Listing

This paper examines the quality of financial reporting of Chinese firms cross-listed in the United States, Hong Kong and noncross-listed Chinese firms. We examine quality of financial reporting based on measures of earnings management, timely loss recognition and price-earnings association. We find that both cross-listings and noncross-listings show significant earnings smoothing and use accruals to manage earnings, and are not timely in loss recognition. We surmise that cross-listing in the United States or Hong Kong has not changed the accounting choices of Chinese cross-listing firms. However, our findings show that the market considers earnings and book value data of cross-listing firms to be more informative than those of noncross-listing firms in the event of good news. Our contribution is to show that in contrast to previous literature, firms from China do not have better reporting quality when they cross-list in the United States. There are still significant accounting deficiencies in many Chinese firms cross-listed in the United States (Financial Times, 2011).

scholarly journals The Impact Of International Financial Reporting Standards On Accounting Curriculum In The United States

2011 ◽  
Vol 4 (1) ◽  
Author(s):  
JeRamMohan R. Yallapragadarry ◽  
Alfred G. Toma ◽  
C. William Roe
Keyword(s):  
United States ◽  
Financial Reporting ◽  
Business Schools ◽  
The United States ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Financial Reporting Standards ◽  
Accounting Curriculum ◽  
The Us ◽  
The Impact

According to the time line presently specified by the Securities and Exchange Commission (SEC), business firms in the United States (US) should switch from the existing US accounting reporting guidelines of the Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS) by the year 2014.  The US business school graduates and accounting professionals have less than four years to understand the differences between the two accounting systems, and to learn how to implement the new International Accounting Standards.  But many of the business schools in the US are not yet ready to include the new IFRS standards in their accounting curriculum. In many schools, administrators do not have any understanding of how to incorporate the new standards in their curriculum. Many European countries shifted to IFRS as early as 2005.  They are ahead of the US in teaching IFRS to their students. The main problems in incorporating IFRS in the curriculum include lack of good textbooks and providing training for professors to learn IFRS procedures so that they can teach them to their students. This paper makes an effort in presenting the historical background of IFRS, and the impact of the adapting of IFRS on US business schools.

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 Latin America and the Question of Cuban Independence

2011 ◽  
Vol 68 (02) ◽  
pp. 209-239 ◽  
Author(s):  
Dalia Antonia Muller
Keyword(s):  
United States ◽  
Latin America ◽  
Latin American ◽  
The United States ◽  
Spanish America ◽  
Anglo Saxon ◽  
Spanish Colonialism ◽  
Latin Americans ◽  
Close Relationship ◽  
The Voice

In a famous account of his travels, titled El destino de un continente, the Argentine writer Manuel Ugarte describes his somewhat disconcerting encounter with the Cuban ex-president José Miguel Gómez while traveling through Latin America during the 1920s. Ugarte, a committed advocate of panhispanismo—the idea that Spanish America was and should be unified by its shared Spanish heritage, especially in light of the “threat” from Anglo- Saxon culture—had come to Cuba to give a series of lectures. Shortly after one of his presentations, the Argentine was introduced to Gómez, who took Ugarte to task for his criticism of Cuba's close relationship to the United States. “You reproach us,” Gómez said, “for not defending our legacy of Spanish civilization, but what have all of you [Latin Americans] done to encourage us, to support us, to make us feel that we are not alone?” Taken aback and made suddenly self-conscious by the accusation, Ugarte concluded that the Cuban was admonishing him for failing to uphold the very principles he was espousing in his lectures. “It seemed as if, through the voice of her representative, all Cuba was saying, ‘It is not we who broke the link; it was you who broke it in allowing it to be cut.’” After some time and much thought, Ugarte came to the realization that “Cuba was not alone responsible for the Cuban situation. Some responsibility was also borne by Latin America.” Through his encounter with Gómez, Ugarte was forced to recognize the limitations of framing what he referred to as the “Cuban situation” exclusively in the context of a cultural war between the United States and Spain. Indeed, the expresident's challenge inspired him to reconsider Cuba's nineteenth-century struggles with both Spanish colonialism and U.S. imperialism in a distinctly inter-Latin American context.

scholarly journals Earnings Quality, Earnings Management, and Cross-listings: Evidence from French Firms

2015 ◽  
Vol 01 ◽  
pp. 13
Author(s):  
Trabelsi Slaheddine ◽  
Keyword(s):  
United States ◽  
United Kingdom ◽  
Earnings Management ◽  
Financial Reporting ◽  
Earnings Quality ◽  
The United States ◽  
Book Value ◽  
Cross Listing ◽  
Timely Loss Recognition

This article examines the earnings quality of French firms cross-listed in the United States and United Kingdom, and non-cross-listed French firms. We examined the quality of financial reporting based on measures of earnings management, timely loss recognition (TLR), and price-earnings association. We found that both cross-listings and non-cross-listings show significant earnings smoothing activities and tend to use accruals to manage earnings, and are not timely in loss recognition. We surmise that cross-listing in the United States or United Kingdom has not changed the accounting choices of French cross-listing firms relative to firms that are not cross-listed. However, our findings show that the market considers earnings and book value data of cross-listing firms to be more informative than those of non-cross-listing firms.

scholarly journals Genesis of the Definition “Goodwill” as Economical Category: International and Russian Aspect

2019 ◽  
Vol 62 ◽  
pp. 01004
Author(s):  
O.A. Kuzmenko ◽  
A.M. Dyachkova-Politi
Keyword(s):  
United States ◽  
Financial Reporting ◽  
Russian Federation ◽  
The United States ◽  
Reporting Standards ◽  
Historical Trends ◽  
Financial Reporting Standards ◽  
Accounting Practice ◽  
Russian Aspect ◽  
Further Development

The article is devoted to formation of the definition “Goodwill” in Russian accounting practice based on historical trends, regulations and standards. During the research the definition was explored from legal stand point, were considered major milestones in its development and, as a result, it was concluded that further development will be necessary due to acceptance of the International Financial Reporting Standards on territory of Russian Federation. It compares experience of the United States and Russia in regulation of the definition and its realization and recognition in financial reporting. As an economic category goodwill have gone through development of the definition reputation to the leading indicator of the company’s stability in merger and acquisition process. From this position, usage of goodwill in consolidated financial reporting is crucial and requires development of the mechanisms for implementation and guardianship of the intangible assets, its proper amortization and impairment.

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