Principles-Based Accounting Standards and Audit Outcomes: Empirical Evidence

2021 ◽  
Author(s):  
Myojung Cho ◽  
Gopal Krishnan
Keyword(s):  
Empirical Evidence ◽  
Accounting Standards

scholarly journals Did CEO’s Equity-Based Compensation Benefit Firms at All? – Evidence From the Regime Before Adoption of Statement of Financial Accounting Standards 123(R)

2018 ◽  
Vol 8 (2) ◽  
pp. 1
Author(s):  
Min (Shirley) Liu
Keyword(s):  
Empirical Evidence ◽  
Agency Problem ◽  
Accounting Standards ◽  
Compensation Method ◽  
Financial Accounting ◽  
Sensitivity Tests ◽  
Accruals Quality ◽  
Reported Earnings

Previous studies documented empirical evidence that stock- and option-based compensation exacerbates the agency problem, which is opposite to the goal of awarding such kind of compensations to executives. If the stock- and option-based compensation is so bad, why did companies previously adopt such kind of compensation method. I use data from 1992-2005, a period before the adoption of FAS 123 (R), to examine whether the stock-based and option-based compensation benefits firms at all. I find that the firms, whose CEOs received higher values of stock- and option- compensations, have higher accruals quality and more predictable reported earnings, as well as enjoy lower implied costs of equity capital.These findings are robust to various sensitivity tests. The results indicate that such compensation method at least provided certain benefits to the firms.

scholarly journals The Different Changes Of Value Relevance Of Earnings Between SOEs And NSOEs After Adoption Of IFRS: Evidence From China

2016 ◽  
Vol 32 (3) ◽  
pp. 765-776
Author(s):  
Wanli Li ◽  
Hong Guo
Keyword(s):  
Empirical Evidence ◽  
Value Relevance ◽  
Accounting Standards ◽  
The State ◽  
Accounting Standard ◽  
Accounting Earnings ◽  
Financial Report ◽  
Empirical Results ◽  
Mandatory Adoption

This article studies changes of value relevance of earnings after mandatory adoption of new CAS (the Chinese Accounting Standards) which is substantially convergent with IFRS (the International Financial Report Standards) in China’s listed enterprises. We extend the previous research by examining the different impact on value relevance of earnings between SOEs (the State-Owned Enterprises) and NSOEs (the Non-State-Owned Enterprises) after adoption of new CAS, which is based on the samples consisting of 836 companies listed on A-shares market of China. The empirical results show that the value-relevance of accounting earnings significantly increased after 2007, and represent that value relevance of earnings increased significantly in SOEs while there are no significant changes in NSOEs after adoption of the new CAS. Our research has implications for China’s Accounting Standard setters who desire to reach expected consequences of convergence with IFRS, and provide empirical evidence for adoption of IFRS in different countries which have both SOEs and NSOEs.

Discussion of commercial lender judgment and fair-value recognition: an investigation into the impact of future accounting standards

2020 ◽  
Vol 28 (4) ◽  
pp. 481-486
Author(s):  
Nen-Chen (Richard) Hwang
Keyword(s):  
Interest Rates ◽  
Empirical Evidence ◽  
Research Design ◽  
Design Methodology ◽  
Experimental Studies ◽  
Accounting Standards ◽  
Fair Value ◽  
Content Type ◽  
Commercial Lenders ◽  
The Impact

PurposeThis paper aims to discuss the study by Warne (2020), which investigates whether disclosure or recognition of fair value information for nonfinancial assets influences commercial lenders’ judgment on interest rates and the dollar amounts of business loans.Design/methodology/approachProvides a discussion of research design and general issues related to behavioral/experimental studies.FindingsIdentifies issues that should be carefully thought out and properly addressed by behavioral researchers in order to improve the robustness of the empirical evidence.Originality/valueThis discussion highlights issues that should be carefully thought out and properly addressed by behavioral researchers in order to improve the robustness of the empirical evidence.

Does Mandatory Retrospective Hedge Effectiveness Assessment under ASC 815 Provide Risk-Relevant Information?

2020 ◽  
Vol 34 (3) ◽  
pp. 61-85
Author(s):  
Zhihong Chen ◽  
Alfred Zhu Liu ◽  
Gim S. Seow ◽  
Hong Xie
Keyword(s):  
Empirical Evidence ◽  
Potential Benefit ◽  
Risk Measures ◽  
Accounting Standards ◽  
Relevant Information ◽  
Potential Usefulness ◽  
Compliance Costs ◽  
Current Accounting ◽  
Effectiveness Assessment ◽  
Shed Light

SYNOPSIS Current accounting standards permit special accounting treatment of derivatives used for hedging purposes. However, the requirement to perform periodic, retrospective assessments of hedge effectiveness and to disclose a quantitative accounting measure of hedge ineffectiveness (AMHI) for such derivatives has been controversial. In response to concerns over the compliance costs of this requirement, the FASB removed this requirement in the recently effective ASU 2017-12. However, this change was made with little empirical evidence on the benefits of retrospective effectiveness assessment and quantitative disclosure of AMHI. We document one potential benefit of this requirement to investors by providing initial evidence that (1) AMHI is positively associated with an array of concurrent market- and accounting-based risk measures and (2) investors react negatively to large AMHIs and related disclosures upon 10-K filings. Our findings suggest that this requirement can provide investors with risk-relevant information and shed light on its potential usefulness.

Does recycling improve information usefulness of income? The case of Japan

2017 ◽  
Vol 25 (3) ◽  
pp. 376-403
Author(s):  
Frendy ◽  
HU Dan Semba
Keyword(s):  
Empirical Evidence ◽  
Cash Flow ◽  
Predictive Power ◽  
Value Relevance ◽  
Accounting Standards ◽  
Net Income ◽  
Content Type ◽  
Japanese Firms ◽  
Incremental Value ◽  
Operating Cash Flow

Purpose The Accounting Standards Board of Japan (ASBJ) proposed a new set of endorsed International Financial Reporting Standards in June 2015. ASBJ claims that non-recycling of other comprehensive income (OCI) items decreases the information usefulness of earnings in a proposed comprehensive income standard. There has been no existing empirical evidence which supports the ASBJ’s statement and the purpose of the study is to test whether OCI recycling improves information usefulness of net income from six perspectives: relative and incremental value relevance, persistence, variability, operating cash flow and net income predictive power. Design/methodology/approach This paper is an empirical work using a listed Japanese firms sample of 5,385 firm-years from fiscal year 2012-2014. Findings The results challenge the ASBJ’s claim that recycling improves the general information usefulness characteristics of net income. The empirical results show that OCI recycling improves net income’s relative value relevance characteristic of financial firms. However, recycling information by itself does not improve the incremental value relevance, and the predictive power of operating cash flow and net income. The authors also find that the inclusion of recycling decreases the persistence and increases the variability of net income. Research limitations/implications This paper has two research limitations. First, this study is constrained to analyze a limited OCI recycling data that is recently disclosed by listed Japanese firms. Second, the results of this study have limited external validity to capital markets with OCI reclassification standards that deviate from Japanese GAAP. Originality/value This study provides initial empirical evidence that examines information usefulness of OCI recycling in Japan. The findings of this study are relevant for accounting standards setters aiming to increase the information usefulness of earnings for capital market investors.

scholarly journals ESTUDOS SOBRE A IMPLEMENTAÇÃO DAS NORMAS INTERNACIONAIS DE CONTABILIDADE: o setor de telecomunicações brasileiro

Revista Foco ◽  
2015 ◽  
Vol 8 (1) ◽  
pp. 51
Author(s):  
Sidmar Roberto Vieira Almeida
Keyword(s):  
Empirical Evidence ◽  
Capital Market ◽  
Accounting Standards ◽  
Complete Information ◽  
Telecommunications Industry ◽  
International Accounting Standards ◽  
Business Operations ◽  
Regulated Markets ◽  
The Universe

A pesquisa teve por objetivo promover a pesquisa e a produção de trabalhos acadêmicos abordando a temática da contabilidade em mercados regulados, buscando evidências empíricas no universo de empresas brasileiras, tendo como foco contribuir para o aperfeiçoamento das relações entre os diferentes players envolvidos com o mercado de capitais. Tal estudo é relevante na medida em que se propõem a analisar os impactos da adoção das normas internacionais de contabilidade em um setor específico, propiciando uma visão mais aprofundada sobre quais alterações contábeis foram mais impactantes nos setores em questão. The research aims to address the issue of accounting in regulated markets, seeking empirical evidence in the universe of Brazilian companies, focusing contribute to the improvement of relations between the different players involved in the capital market. Understanding the efficiency of the Brazilian capital market after adoption of international accounting standards and the role of the explanatory notes to present more complete information regarding the business operations is critical. This research sought through the presentation and discussion of studies, offer a range of contributions to investors, market analysts, regulators and other researchers; towards a better understanding of the effects generated in the telecommunications industry.

Evidence from China on Whether Harmonized Accounting Standards Harmonize Accounting Practices

2002 ◽  
Vol 16 (3) ◽  
pp. 183-197 ◽  
Author(s):  
Shimin Chen ◽  
Zheng Sun ◽  
Yuetang Wang
Keyword(s):  
Earnings Management ◽  
Empirical Evidence ◽  
Accounting Standards ◽  
Listed Companies ◽  
International Accounting Standards ◽  
Accounting Earnings ◽  
Financial Reports ◽  
Accounting Regulation ◽  
Earnings Gap ◽  
Research Opportunity

While international harmonization of accounting is gaining momentum in recent years, there is little empirical evidence on whether the harmonization of accounting standards leads to harmonized accounting practices and comparable financial reports. Benefiting from a unique research opportunity in China, this study provides such evidence. Since January 1, 1998, a newly promulgated Accounting Regulation for Listed Companies is in effect. This new regulation is the most comprehensive effort at harmonizing Chinese generally accepted accounting standards (GAAP) with International Accounting Standards (IAS). Based on a sample of listed companies required to reconcile accounting earnings from Chinese GAAP to IAS, we find no evidence that the Chinese government's efforts eliminated or significantly reduced the gap between Chinese and IAS earnings despite harmonized accounting standards. We explore reasons for the continued earnings gap after the 1998 regulation and find that a lack of adequate supporting infrastructure, manifested in excessive earnings management and low quality auditing, may explain the gap.

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