Determinants Of The Use Of Special Purpose Companies (SPCs) On Pre- And Post-IFRS: Empirical Evidence From Korea

We investigate which factors determine the use of a special purpose company (SPC) by a sponsoring company and whether those determinants differ before and after IFRS (International Financial Reporting Standards) adoption. Using financial data from Korean listed companies, our results indicate that use of an SPC is associated with financial reporting incentives (e.g., lowering leverage) and economic benefits (e.g., fundraising). However, the effect of leverage on the use of SPCs is not significant after the adoption of the IFRS. These results suggest that, although companies are generally motivated to use SPCs for both financial reporting and economic purposes, only economic motivation influences the use of SPCs after IFRS adoption. This implies that the regulation for reporting an SPC’s consolidated financial statement under IFRS plays a role in decreasing the use of SPCs for financial reporting discretion. We extend the prior literature on SPCs by documenting the effects of IFRS adoption on the determinants of the use of SPCs.

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Earnings management to avoid earnings decreases and losses

REVISTA CATARINENSE DA CIÊNCIA CONTÁBIL ◽

10.16930/2237-7662202131531 ◽

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.

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Earnings management to avoid earnings decreases and losses

REVISTA CATARINENSE DA CIÊNCIA CONTÁBIL ◽

10.16930/2237-766220213153 ◽

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

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Institutionally Speaking, are Global Standards Adoptable in a Given Jurisdiction? A Critical Analysis of the IFRS's Use in Ukraine through the Lens of New Institutional Accounting

Periodica Polytechnica Social and Management Sciences ◽

10.3311/ppso.17262 ◽

2021 ◽

Author(s):

Oleh Pasko

Keyword(s):

Financial Reporting ◽

Financial Reporting Standards ◽

Ifrs Adoption ◽

Reporting Incentives ◽

Institutional Infrastructure ◽

Global Standards ◽

Institutional Aspects ◽

Enforcement Mechanisms ◽

Market Pressures ◽

Technical Rules

This paper examines the consequences of International Financial Reporting Standards (IFRS) adoption in Ukraine through the lens of New Institutional Accounting theory. IFRS adoption's effects on management's reporting incentives, enforcement and institutional complementarities are analysed. I find that adoption at a technical level is not enough to be called "adoption" as profound changes at the institutional level are also required. Adopted IFRS are subjected to the same type of institutional and market pressures that gave rise to the old set of standards and as a result, the practice of financial reporting is unchanged at its core while only new technical rules apply. Hence, jurisdictions should not pursue only technical adoption but should also try their best to align as close as possible all institutional aspects of this issue. The best advice for all jurisdictions with an institutional infrastructure similar to Ukraine's is to strengthen management's reporting incentives and enforcement mechanisms.

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COMPLIANCE WITH IFRS REQUIRED DISCLOSURE AND ANALYSTS’ FORECAST ERRORS: EVIDENCE FROM BRAZIL

Contabilidade Vista & Revista ◽

10.22561/cvr.v29i1.3906 ◽

2018 ◽

Vol 29 (1) ◽

pp. 77-100 ◽

Cited By ~ 1

Author(s):

Edilene Santana Santos ◽

Flávia Almeida Morato da Silva ◽

Hsia Hua Sheng ◽

Mayra Ivanoff Lora

Keyword(s):

Financial Reporting ◽

Negative Relationship ◽

Forecast Accuracy ◽

Economic Benefits ◽

Earnings Forecast ◽

Forecast Errors ◽

Ifrs Adoption ◽

Compliance Level ◽

Before And After ◽

The Impact

We analyze the relationship between analysts' earnings forecast errors and Brazilian listed firms’ compliance with International Financial Reporting Standards (IFRS) required disclosure. Through analysis of a panel data, we examine whether the variance in the Brazilian firms’ disclosure compliance levels in the Notes to Financial Statements for 2010 and 2012 affects analysts’ earnings forecast errors for 2011 and 2013, respectively, finding a significant negative relationship between these variables. By performing a compliance level analysis per firm, our study considers whether and to what extent firms effectively disclose as required by IFRS (as “IFRS serious adopters”), distinguishing them from firms that mere formally adopt IFRS (as “IFRS label adopters”), without effectively complying with it. Following other studies, we use four alternative models to measure the disclosure compliance level per firm, and we do not find significant improvement in the firms’ disclosure levels from 2010 to 2012, except if we use the most tolerant model. By this approach, our research contributes to clarify the impact of IFRS adoption on analysts’ forecast accuracy, as other studies that use only binary variables (analysts’ forecasts before and after IFRS adoption) have found contradictory results. Our findings confirm other studies on the international accounting convergence in other countries, emphasizing that compliance is at least as important as the simply formal IFRS adoption. This corroborates the relevance of enforcement mechanisms to induce firms to better comply with IFRS, thus to better attain the economic benefits expected from its adoption.

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Financial statement comparability in the extractive industry

Accounting Research Journal ◽

10.1108/arj-08-2019-0161 ◽

2020 ◽

Vol 33 (3) ◽

pp. 523-541

Author(s):

Christelle Smith ◽

Elmar R. Venter

Keyword(s):

Financial Reporting ◽

Mineral Resources ◽

Financial Statements ◽

Financial Statement ◽

Accounting Standard ◽

Extractive Industry ◽

Content Type ◽

Financial Reporting Standards ◽

Ifrs Adoption ◽

Cross Country

Purpose This paper aims to investigate financial statement comparability in the extractive industry. This paper focuses on the extractive industry because International Financial Reporting Standards (IFRS) contain limited guidance on the accounting treatment for exploration and evaluation (E&E) costs and IFRS 6 – Exploration for and Evaluation of Mineral Resources allowed firms to continue with existing divergent accounting treatment of E&E costs. Design/methodology/approach The authors use data from Australia, a country that adopted IFRS in 2005 with a large extractive industry. They also compare changes in cross-country comparability around the IFRS adoption date between Australian firms and adopters relative to Australian firms and non-adopters to better isolate changes in comparability that are attributable to the adoption of IFRS from other sources that are not related to the adoption of IFRS. The authors measure comparability consistent with De Franco et al. (2011) where financial statements are comparable when two firms produce similar accounting amounts for similar economic events. Findings For non-extractive industry firms, the authors find the comparability of financial statements of Australian firms increased with other adopters and that this increase was relatively greater than the increase with non-adopter firms. This evidence is consistent with comparability benefits associated with the adoption of IFRS. However, for extractive industry firms, the authors do not find a significantly greater increase in the comparability of financial statements of Australian firms with adopters relative to the increase with non-adopters, suggesting that the increase is likely not associated with the adoption of IFRS. In additional analysis, they find that following IFRS adoption non-extractive Australian firms have greater within-country comparability relative to extractive Australian firms, while there was no difference in the pre-adoption period. Originality/value The evidence suggests that the divergent practices for E&E costs under IFRS 6 and the lack of an accounting standard that deals with matters relating to the extractive industry hinder the comparability of financial statements in this industry.

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A study of Effects and implications of differences between Indian GAAP and IFRS

KnE Social Sciences ◽

10.18502/kss.v4i6.6687 ◽

2020 ◽

Author(s):

Anubha Srivastava

Keyword(s):

Financial Reporting ◽

Reporting System ◽

Financial Burden ◽

Accounting Standards ◽

Financial Statement ◽

Reporting Standards ◽

High Quality ◽

Accounting Standard ◽

Financial Reporting Standards ◽

Ifrs Adoption

Economic growth in any economy requires sustainable high-quality financial reporting standards. However in the era of globalization, with rapidly changing rules and regulations in accounting world, Indian financial reporting system too cannot be isolated from the global developments. Lack of standardization in different accounting standards imposes a financial burden on all the stakeholders, which includes both internal as well as external burden to an organization. It is also too cumbersome for investors to compare the financial statement of corporates if they follow different accounting policy. It was felt that there should be one global set of accounting standards for all. Thus IASB came in existence and formulated IFRS. IFRS is high-quality principle-based accounting standard which aims to bring uniformity comparability and transparency in accounting world. In India the conversion process has started in 2015-16 onwards where all the accounting standards will be gradually fully converged with IFRS and will be named as Ind as. This paper attempts to find out the key difference among IFRS, Indian GAAP and ind AS and its implications. A questionnaire survey has been conducted to find out the implication of differences. The paper concludes that adoption of IFRS would benefit the economy in all aspects. Keywords: IFRS, Indian GAAP, Ind AS, key difference between IFRS, Ind AS and Indian GAAP, IFRS adoption,

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IFRS Adoption and Reporting Quality: An Assessment of User’s Perception in Nigeria

Asian Journal of Economics Business and Accounting ◽

10.9734/ajeba/2021/v21i930415 ◽

2021 ◽

pp. 1-9

Author(s):

Aminu Abdullahi ◽

Hadiza Ahmed Suleiman

Keyword(s):

Financial Reporting ◽

Accounting Standards ◽

Reporting Quality ◽

Financial Statements ◽

Financial Statement ◽

Comparative Approach ◽

Financial Reports ◽

Financial Reporting Standards ◽

Ifrs Adoption ◽

Qualitative Characteristics

The study assessed the perception of financial statement users on the extent of reporting quality following IFRS adoption in Nigeria. A comparative approach was utilized, where users’ (investors)opinions on reporting quality between the Statement of Accounting Standards (SAS) regime and the International Financial Reporting Standards regime were sought and compared. The results obtained from the structured Likert scale questionnaires were analyzed using the T-Test. It was found that all the qualitative characteristics of financial reporting which were used as reporting quality variables in the study have improved with the adoption of IFRS except for the extent of the ability of financial reports to confirm or correct prior user’s expectation which was discovered to be better during SAS regime. It was recommended that the Financial Reporting Council of Nigeria (FRCN) should embark on advocacy aimed at educating investors’ especially, institutional on the issue of prediction and assessment of IFRS-based financial statements.

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IFRS adoption, value relevance and conditional conservatism: evidence from China

International Journal of Accounting and Information Management ◽

10.1108/ijaim-09-2018-0101 ◽

2019 ◽

Vol 27 (4) ◽

pp. 529-546 ◽

Cited By ~ 4

Author(s):

Cyrus Isaboke ◽

Yan Chen

Keyword(s):

Financial Reporting ◽

Value Relevance ◽

Financial Information ◽

Content Type ◽

Financial Reporting Standards ◽

Ifrs Adoption ◽

Conditional Conservatism ◽

Before And After ◽

The Relationship ◽

A Company

Purpose This study sought to evaluate the relationship between value relevance of financial information and conditional conservatism of non-financial companies listed in China. Design/methodology/approach Using panel data comprising of 28,723 firm years, the authors determine the value relevance of financial information before and after mandatory International Financial Reporting Standards (IFRS) adoption while incorporating the relationship with conditional conservatism. The authors further examined how this relationship varies between state and non-state owned companies. Findings Conditional conservatism is positively (negatively) related to value relevance prior (post) to mandatory IFRS adoption while it makes no difference as to whether a company is state or non-state owned, as IFRS has a positive and significant effect on value relevance. Conservatism, on the other hand, has a negative and insignificant relationship with market value of both state and non-state owned firms during the pre- and post-IFRS period. Originality/value By exploring an emerging economy, the authors provide evidence on the variations in value relevance amongst state and non-state owned firms. In particular, the authors establish the positive effect of IFRS on the value relevance of non-state firms as compared to state-owned institutions.

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Toward Sustainable Accounting Information: Evidence from IFRS Adoption in Korea

Sustainability ◽

10.3390/su11041154 ◽

2019 ◽

Vol 11 (4) ◽

pp. 1154 ◽

Cited By ~ 4

Author(s):

Woo Jae Lee

Keyword(s):

Earnings Management ◽

Financial Reporting ◽

Small Firms ◽

Earnings Quality ◽

Accounting Information ◽

Financial Statement ◽

Listed Firms ◽

Financial Reporting Standards ◽

Ifrs Adoption ◽

The Past

The harmonization of accounting standards has been an international trend in the past two decades. As of 2018, 144 of 166 profiled jurisdictions require the use of International Financial Reporting Standards (IFRS). Nevertheless, there is mixed evidence on the effect of IFRS on sustainable accounting information. This study examines whether IFRS adoption improves earnings sustainability, focusing on emerging markets. Specifically, it tests the effect of IFRS on earnings quality by comparing earnings management and financial statement comparability of Korean listed firms for the pre- and post-IFRS periods. The results show that firms report less managed earnings in the post-IFRS period than in the pre-IFRS period. Furthermore, the results suggest the enhancement of financial statement comparability in the post-IFRS period compared to the pre-IFRS period. In particular, this paper documents that the effect of IFRS on sustainable accounting information is more pronounced in competitive industries. Moreover, it shows that small firms benefit more from adopting IFRS. Overall, this study finds that IFRS adoption in Korea improves the overall sustainability of accounting information.

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