scholarly journals The Impacts of IFRS Adoption on Financial Statement Quality for Firms Listed in Indonesia Stock Exchange

2014 ◽  
Vol 2 (4) ◽  
pp. 95-105
Author(s):  
Inten Rachmawati Abuda ◽  
Felizia Arni Rudiawarni
Keyword(s):  
Earnings Management ◽  
Value Relevance ◽  
Emerging Market ◽  
Explanatory Power ◽  
Share Price ◽  
Financial Statement ◽  
Earnings Volatility ◽  
Ifrs Adoption ◽  
Significant Difference ◽  
The Impact

Objective - the objective of this research is to explain whether the adoption of IFRS in Indonesia has improved accounting information quality. Methodology/Technique - Earnings volatility and discretionary accruals are used to test the scope of earnings management on a set of accounting standard used. The regression of share price and book value per share and net profit per share, along with the explanatory power of the model were used to test the value relevance of the accounting standards applied. Findings - This research finds that no significant difference of earnings management's scope after the mandatory adoption of the IFRS. Moreover, this research also finds that IFRS does not result in higher value relevance. Novelty - This research presents evidence of IFRS convergence from an emerging market point of view, particularly in Indonesia. The focus of this research is to examine the impact of IFRS adoption of financial statement quality using multiple measurements. Type of Paper - Empirical Keywords: Financial statement quality; International Financial Reporting Standard (IFRS); Earnings management; Earnings volatility; Value relevance.

scholarly journals The impact of IFRS-based accounting standards on earnings management: evidence from Malaysia

2016 ◽  
Vol 5 (1) ◽  
pp. 1
Author(s):  
Yosra Makni Fourati ◽  
Rania Chakroun Ghorbel
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Emerging Market ◽  
Accounting Standards ◽  
Absolute Value ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Earning Quality ◽  
The Impact ◽  
Different Levels

This study aims to examine the consequences of International Financial Reporting Standards (IFRS) convergence in an emerging market. More specifically, we investigate whether the adoption of the new set of accounting standards in Malaysia is associated with lower earnings management. Using a sample of 3,340 firm-year observations across three reporting periods with different levels of IFRS adoption, we provide evidence that IFRS convergence improves earning quality. In particular, we find a significant decrease in the absolute value of discretionary acccruals in the partial IFRS-convergence period (2007-2011), whereas this effect is restrictive after the complete IFRS- implementation.

DISCUSSION OF The Impact of Mandatory IFRS Adoption on Accounting Quality: Evidence from Australia

2012 ◽  
Vol 11 (1) ◽  
pp. 147-154 ◽  
Author(s):  
Nabil Elias
Keyword(s):  
Quality Improvement ◽  
Earnings Management ◽  
Value Relevance ◽  
Accounting Quality ◽  
Early Loss ◽  
Ifrs Adoption ◽  
The Impact ◽  
Quality Evidence ◽  
Point Of Reference

ABSTRACT Studying the impact of mandatory IFRS adoption on accounting quality in Australia provides a point of reference for comparison to other IFRS-adopting countries. It could also guide the process of transition for countries considering IFRS adoption. Similar to previous research, Chua et al. (2012) use earnings management, early loss recognition, and value relevance to surrogate accounting quality. The study concludes that there is accounting quality improvement as a result of less earnings management, early loss recognition, and increased value relevance. Although the reasons for the results are unexplored, this conclusion, similar to other prior research, is based on disputable interpretations that greater conservatism and lower earnings management reflect higher accounting quality.

scholarly journals THE IMPACT OF IFRS ADOPTION ON EARNINGS MANAGEMENT IN BANKING COMPANIES IN INDONESIA STOCK EXCHANGE

2016 ◽  
Vol 13 (2) ◽  
pp. 176
Author(s):  
Prima Santy ◽  
Tawakkal Tawakkal ◽  
Grace T. Pontoh
Keyword(s):  
Earnings Management ◽  
Stock Exchange ◽  
Research Result ◽  
Control Variable ◽  
T Test ◽  
Test Analysis ◽  
Ifrs Adoption ◽  
Significant Difference ◽  
Before And After ◽  
The Impact

The issue of the IFRSadoption as a standard that can lead to a reduction of earnings management. The research aimed to give empirical evidence concerning the impact of the IFRS adoption on earnings management, and the test of the difference level of earnings management between before and after the IFRS adoption. The research scope focused on the implementation of IFRS adoption particularly in PSAK No. 50 and PSAK No. 55 (revised 2006) concerningfinancial instruments. The research objects were the banking companies listed in Indonesia Stock Exchange for 4 years (2008-2011), i.e. as many as 23 banks. Samples were taken by using the purposive sampling technique. The main variables in this research are IFRS and earnings management,and includes several control variable, among others are, size, financial leverage, market to book value and institutional investors. The data were analyzed usingmultiple regression analysis and different t-test analysis. The research result indicates that the IFRS adoption has not effect the decreaseon the earnings management.Among the four control variables, the variable institutional investor is found not to have theeffect on earnings management, whereas the other three variables haveeffect.The result of the different t-test analysis also indicates that statistically there is not significant difference on the level of the earnings management between before and after IFRS adoption. Thus, based on this study concluded that the adoption of IFRS still allow for the occurrence of earnings management.

scholarly journals The Value Relevance of Goodwill: IFRSs and Global Financial Crisis (GFC)

2018 ◽  
Vol 8 (2) ◽  
pp. 26
Author(s):  
Ng Shir Li ◽  
Dennis W Taylor
Keyword(s):  
Financial Crisis ◽  
Financial Reporting ◽  
Global Financial Crisis ◽  
Value Relevance ◽  
Explanatory Power ◽  
Balance Sheet ◽  
Share Price ◽  
Book Value ◽  
Income Statement ◽  
The Impact

This study contributes to the issue of accounting for goodwill by examining the impact of changing from the Australian Generally Accepted Accounting Principles (AGAAP) to Australian International Financial Reporting Standards (AIFRS) on goodwill, 3 years (2002 to 2004) before and 3 years (2006 to 2008) after AIFRS adoption. The sample is drawn from top 200 companies listed on the Australian Stock Exchange (ASX). This study applies multiple regressions. The dependent variable is the closing share price 3 months after the balance sheet date. The independent variables consist of earnings per share, book value per share, goodwill in the balance sheet, goodwill in the income statement (goodwill amortisation and goodwill impairment) and goodwill acquisition. The findings indicate that goodwill accounted for in the income statement and balance sheet do not provide increased explanatory power of market value under AIFRS compared to AGAAP. Moreover, the goodwill in the income statement does not show value relevance in year 2007, but became significant in year 2008 during the global financial crisis (GFC). Also, the age of goodwill recorded in the balance sheet does not affect the value relevance of earnings and book value in the post-adoption period. This study contributes new evidence on accounting for goodwill under pre and post-IFRS accounting regimes in Australia. This is also the first study to examine the separate effects of goodwill accounting on earnings and net assets, with special attention given to the period before and during the GFC in capital markets.

scholarly journals THE IMPACT OF IFRS ADOPTION ON EARNINGS MANAGEMENT IN BANKING COMPANIES IN INDONESIA STOCK EXCHANGE

2016 ◽  
Vol 13 (2) ◽  
pp. 176
Author(s):  
Prima Santy ◽  
Tawakkal Tawakkal ◽  
Grace T. Pontoh
Keyword(s):  
Earnings Management ◽  
Stock Exchange ◽  
Research Result ◽  
Control Variable ◽  
T Test ◽  
Test Analysis ◽  
Ifrs Adoption ◽  
Significant Difference ◽  
Before And After ◽  
The Impact

The issue of the IFRSadoption as a standard that can lead to a reduction of earnings management. The research aimed to give empirical evidence concerning the impact of the IFRS adoption on earnings management, and the test of the difference level of earnings management between before and after the IFRS adoption. The research scope focused on the implementation of IFRS adoption particularly in PSAK No. 50 and PSAK No. 55 (revised 2006) concerningfinancial instruments. The research objects were the banking companies listed in Indonesia Stock Exchange for 4 years (2008-2011), i.e. as many as 23 banks. Samples were taken by using the purposive sampling technique. The main variables in this research are IFRS and earnings management,and includes several control variable, among others are, size, financial leverage, market to book value and institutional investors. The data were analyzed usingmultiple regression analysis and different t-test analysis. The research result indicates that the IFRS adoption has not effect the decreaseon the earnings management.Among the four control variables, the variable institutional investor is found not to have theeffect on earnings management, whereas the other three variables haveeffect.The result of the different t-test analysis also indicates that statistically there is not significant difference on the level of the earnings management between before and after IFRS adoption. Thus, based on this study concluded that the adoption of IFRS still allow for the occurrence of earnings management.

scholarly journals The Effects of International Financial Reporting Standards on Reporting Quality of Financial Institutions in Ghana

2020 ◽  
Vol 10 (2) ◽  
pp. 94
Author(s):  
Edmond Amissah ◽  
Paul Hammond ◽  
Reginald Djimatey
Keyword(s):  
Earnings Management ◽  
Financial Institutions ◽  
Financial Reporting ◽  
Emerging Market ◽  
Reporting Quality ◽  
Insurance Companies ◽  
Reporting Standard ◽  
Ifrs Adoption ◽  
The Impact

This study sought to examine the reporting quality of financial institutions in Ghana after adopting International Financial Reporting Standard (IFRS) as its official national reporting standard. Using a fixed effect logistic regression, the study compares the earnings management of banks and insurance firms before and after IFRS adoption on reporting quality. The data used was drawn from 51 financial institutions made up of 23 universal banks and 28 insurance companies observed over the period 2003 to 2014. The empirical results indicate that financial institutions exhibit more earnings management during the post-adoption era which is interpreted as a decline in the quality of financial reporting among financial institutions in Ghana. The results documented in this study add to the dearth of literature and contributes to the debate on IFRS adoption and its related impact on reporting quality (earnings management) among financial institutions from the perspective of an emerging market. The study is unique in the sense that it includes the insurance industry where the literature is largely silent especially, on the impact of IFRS adoption by countries on the African continent. Furthermore, unlike previous studies, this paper considers both listed and non-listed firms.

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.

Earnings management and audit quality at Damascus securities exchange: Does managerial ownership matter?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zukaa Mardnly ◽  
Zinab Badran ◽  
Sulaiman Mouselli
Keyword(s):  
Earnings Management ◽  
Ownership Structure ◽  
Management Practices ◽  
Audit Quality ◽  
Emerging Market ◽  
Ordinary Least Squares ◽  
Managerial Ownership ◽  
External Audit ◽  
Content Type ◽  
The Impact

Purpose The purpose of this study is to examine the individual and combined effect of managerial ownership and external audit quality, as two control mechanisms, on earnings management. Design/methodology/approach This study applies ordinary least squares estimates on fixed-time effects panel regression model to test the impact of the investigated variables on earnings management for the whole population of banks and insurance companies listed at Damascus Securities Exchange (DSE) during the period from 2011 to 2018. Findings The empirical evidence suggests a negative non-linear relationship between managerial ownership (as proxied by board of directors’ ownership) on earnings management. However, neither audit quality nor the simultaneous effect of the managerial ownership and audit quality (Big 4) affects earnings management. Research limitations/implications DSE is dominated by the financial sector and the number of observations is constrained by the recent establishment of DSE and the small number of firms listed at DSE. In addition, the non-availability of data on executive directors’ and foreign ownerships restrict our ability to uncover the impact of different dimensions of ownership structure on earnings management. Practical implications First, it stimulates investors to purchase stocks in financial firms that enjoy both high managerial ownership, as they seem enjoying higher earnings quality. Second, the findings encourage external auditors to consider the ownership structure when choosing their clients as the financial statements’ quality is affected by this structure. Third, researchers may need to consider the role of managerial ownership when analyzing the determinants of earnings management. Originality/value It fills the gap in the literature, as it investigates the impact of both managerial ownership and audit quality on earnings management in a special conflict context and in an unexplored emerging market of DSE. It suggests that managerial ownership exerts a significant role in controlling earnings management practices when loose regulatory environment combines conflict conditions. However, external audit quality fails to counter earnings management practices when conditions are fierce.

CEOs’ accounting-based attributes and earnings management strategies under mandatory IFRS adoption

2018 ◽  
Vol 19 (4) ◽  
pp. 608-625 ◽  
Author(s):  
Amel Kouaib ◽  
Anis Jarboui ◽  
Khaireddine Mouakhar
Keyword(s):  
Earnings Management ◽  
Small Sample Size ◽  
Small Sample ◽  
Moderating Effect ◽  
Audit Committees ◽  
Content Type ◽  
Ifrs Adoption ◽  
Experience Education ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to focus on the moderating effect of mandatory International Financial Reporting Standards (IFRS) adoption on the relationship between chief executive officer (CEO) experience/education and earnings management in European companies. Design/methodology/approach Data from a sample of 302 European firms listed on Stoxx Europe 600 index and 596 CEOs from 2000 to 2014 are used to test the moderation model using moderation regression analysis. Findings Evidence reveals that CEO’s accounting-based attributes are negatively associated with accruals-based earnings management and positively associated with real earnings management (REM). Further, mandatory IFRS adoption significantly moderates the impact of CEO’s accounting-based traits on earnings-management activities. Research limitations/implications A small number of European firms were studied and, given the long study period, many firms with missing data were eliminated. To avoid a small sample size, countries with few observations were included, which leads to an uneven distribution between observations per country. Practical implications Findings from this paper can help: European firms to consider demographic traits when recruiting or promoting executives; the IASB to improve enforcement mechanisms and make IFRS implementation mandatory; and audit committees to effectively monitor REM. Originality/value This study is unique in providing European evidence for the moderating effect of mandatory IFRS adoption on the relationship between CEOs’ accounting experience/education and earnings management activities. This paper is also relevant as it addresses the effectiveness and efficiency of accounting literates.

Sign in / Sign up

Export Citation Format

Share Document