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Toward Sustainable Accounting Information: Evidence from IFRS Adoption in Korea

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  • Woo Jae Lee

    (College of Economics and Management, Chungnam National University, Daejeon 34134, Korea)

Abstract

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.

Suggested Citation

  • Woo Jae Lee, 2019. "Toward Sustainable Accounting Information: Evidence from IFRS Adoption in Korea," Sustainability, MDPI, vol. 11(4), pages 1-17, February.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:4:p:1154-:d:208101
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    4. Ana Paula Silva & Alexandra Fontes & Carlos Menezes & Tânia Menezes Montenegro, 2023. "Transitioning to an IFRS-Based Accounting System: Longitudinal Insights from Practitioners in Portugal," Sustainability, MDPI, vol. 15(20), pages 1-21, October.
    5. Ana Belen Tulcanaza-Prieto & Younghwan Lee & Jeong-Ho Koo, 2020. "Effect of Leverage on Real Earnings Management: Evidence from Korea," Sustainability, MDPI, vol. 12(6), pages 1-20, March.
    6. Andrzej Piosik & Marzena Strojek-Filus & Aleksandra Sulik-Górecka & Aleksandra Szewieczek, 2019. "Gender and Age as Determinants of Job Satisfaction in the Accounting Profession: Evidence from Poland," Sustainability, MDPI, vol. 11(11), pages 1-24, May.
    7. Andrzej Piosik, 2021. "Revenue Identification in Attaining Consensus Estimates on Income Predictions: The Function of Ownership Concentration and Managerial Ownership Confirmation from Poland," Sustainability, MDPI, vol. 13(23), pages 1-16, December.
    8. Arber Hoti & Lulzim Krasniqi, 2022. "Impact of international financial reporting standards adoption on the perception of investors to invest in small-to-medium enterprise adopting transparency in disclosure policies," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 13(1), pages 506-515, March.

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