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Do accounting standards matter? An exploratory analysis of earnings management before and after IFRS adoption

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  • Jeanjean, Thomas
  • Stolowy, Hervé

Abstract

In this paper, we analyze the effect of the mandatory introduction of IFRS standards on earnings quality, and more precisely on earnings management. We concentrate on three IFRS first-time adopter countries, namely Australia, France, and the UK. We find that the pervasiveness of earnings management did not decline after the introduction of IFRS, and in fact increased in France. Our findings confirm that sharing rules is not a sufficient condition to create a common business language, and that management incentives and national institutional factors play an important role in framing financial reporting characteristics. We suggest that the IASB, the SEC and the European Commission should now devote their efforts to harmonizing incentives and institutional factors rather than harmonizing accounting standards.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Accounting and Public Policy.

Volume (Year): 27 (2008)
Issue (Month): 6 ()
Pages: 480-494

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Handle: RePEc:eee:jappol:v:27:y:2008:i:6:p:480-494

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Web page: http://www.elsevier.com/locate/jaccpubpol

Related research

Keywords: IFRS Earnings management Thresholds;

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Cited by:
  1. Ahmed, Kamran & Chalmers, Keryn & Khlif, Hichem, 2013. "A Meta-analysis of IFRS Adoption Effects," The International Journal of Accounting, Elsevier, vol. 48(2), pages 173-217.
  2. Palea, Vera, 2013. "IAS/IFRS and Financial Reporting Quality: Lessons from the European Experience," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201330, University of Turin.
  3. Apostolos A. Ballas & Despina Skoutela & Christos A. Tzovas, 2010. "The relevance of IFRS to an emerging market: evidence from Greece," Managerial Finance, Emerald Group Publishing, vol. 36(11), pages 931-948, November.
  4. Bozos, Konstantinos & Ratnaike, Yasanji C. & Alsharairi, Malek, 2014. "How has the international harmonization of financial reporting standards affected merger premiums within the European Union?," International Review of Financial Analysis, Elsevier, vol. 31(C), pages 48-60.
  5. Alain Devalle & Riccardo Magarini, 2012. "Assessing the value relevance of total comprehensive income under IFRS: an empirical evidence from European stock exchanges," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 8(1), pages 43-68.
  6. Mouna Ben rejeb attia & Houda Sassi & Naima Lassoued, 2013. "Signaling over income smoothing and IFRS adoption by banks: a panel data analysis on MENA countries," Economics Bulletin, AccessEcon, vol. 33(3), pages 2340-2356.
  7. Gabriele Guggiola, 2010. "IFRS Adoption in the E.U., accounting harmonization and market efficiency: a review," Economics and Quantitative Methods qf1002, Department of Economics, University of Insubria.
  8. Karampinis, Nikolaos I. & Hevas, Dimosthenis L., 2013. "Effects of IFRS Adoption on Tax-induced Incentives for Financial Earnings Management: Evidence from Greece," The International Journal of Accounting, Elsevier, vol. 48(2), pages 218-247.
  9. François Aubert, Gary Grudnitski, 2012. "Analysts' estimates: What they could be telling us about the impact of IFRS on earnings manipulation in Europe Purpose – The purpose of this paper is to examine whether mandatory adoption of Interna," Review of Accounting and Finance, Emerald Group Publishing, vol. 1(1), pages 53-72, February.
  10. Ulf Br&?ggemann & J?rg-Markus Hitz & Thorsten Sellhorn, 2013. "Intended and Unintended Consequences of Mandatory IFRS Adoption: A Review of Extant Evidence and Suggestions for Future Research," European Accounting Review, Taylor & Francis Journals, vol. 22(1), pages 1-37, May.
  11. Macías, Marta & Muiño, Flora, 2011. "Examining dual accounting systems in Europe," The International Journal of Accounting, Elsevier, vol. 46(1), pages 51-78, March.
  12. Yuriy, Burykin & Guzaliya, Klychova & Bremmers, Harry J., 2012. "The Development Of Integrated Accounting In Small And Medium-Sized Companies In The Agri- And Foodsector Of The Russian Federation," APSTRACT: Applied Studies in Agribusiness and Commerce, AGRIMBA, vol. 6.
  13. Cătălina Gorgan & Vasile Gorgan & Valentin Florentin Dumitru & Ileana Cosmina Pitulice, 2012. "The Evolution of the Accounting Practices During the Recent Economic Crisis: Empirical Survey Regarding the Earnings Management," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 14(32), pages 550-562, June.
  14. Marta Cristina Pelucio Grecco, 2013. "The Effect of Brazilian convergence to IFRS on earnings managment by listed Brazilian nonfinancial companies," Brazilian Business Review, Fucape Business School, vol. 10(4), pages 110-132, October.

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