Lifting the veil of accounting information under different accounting standards: lessons learned from the German experiment
AbstractIt is well-known from US-related studies that investors systematically overreact to accrual-based accounting information. We address the question to what extent this accrual anomaly is related to different accounting standards. We provide empirical evidence that the accrual anomaly is also present in Germany. However, this anomaly has become particularly important after the year 2000 and cannot be detected for firms presenting their financial statements under German GAAP. It is argued that introducing true and fair view accounting, like IFRS, that relies on difficult-to-verify information, may not be suitable to improve accounting information quality in the context of a weak corporate governance system. --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Center for Entrepreneurial and Financial Studies (CEFS), Technische Universität München in its series CEFS Working Paper Series with number 2006-01.
Date of creation: 2006
Date of revision:
accrual anomaly; earnings persistency; conservative accounting; true and fair view accounting; accounting standards; accounting regulation; empirical accounting research; German GAAP; IFRS/IAS; US-GAAP;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Paul Hribar, 2002. "Errors in Estimating Accruals: Implications for Empirical Research," Journal of Accounting Research, Wiley Blackwell, Wiley Blackwell, vol. 40(1), pages 105-134, 03.
- Elgers, Pieter T. & Lo, May H. & Pfeiffer, Ray Jr., 2003. "Analysts' vs. investors' weightings of accruals in forecasting annual earnings," Journal of Accounting and Public Policy, Elsevier, Elsevier, vol. 22(3), pages 255-280.
- Robert E. Verrecchia & Christian Leuz, 1999. "The Economic Consequences of Increased Disclosure," Working Paper Series: Finance and Accounting 41, Department of Finance, Goethe University Frankfurt am Main.
- Leuz, Christian & Nanda, Dhananjay & Wysocki, Peter D., 2003. "Earnings management and investor protection: an international comparison," Journal of Financial Economics, Elsevier, Elsevier, vol. 69(3), pages 505-527, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.