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IFRS convergence and earnings management in India: a mixed method approach

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  • Yasser Barghathi
  • Poorna Sriram
  • Naimat U. Khan
  • Umair Riaz

Abstract

This paper uses a mixed method to address the impact of International Financial Reporting Standards (IFRS) convergence on earning management in India. We examine a sample of 70 Indian listed companies with net worth exceeding 500 crore INR that adopted IND(AS) in Phase 1 in 2016. The Modified Jones Model is employed to assess earnings management over four years-two years pre- and post-IND(AS) adoption. Additionally, we conducted six semi-structured interviews with auditors and accountants. Contrary to the hypothesis of improved reporting quality through IFRS harmonisation and reduced principal-principal agency conflict, our findings reveal increased earnings management practices post-IND(AS) adoption. The complementary quantitative and qualitative results highlight India's power imbalance, enabling large firms with tight controls to influence reporting practices, potentially indicating principal-principal conflicts between majority and minority shareholders. This research suggests implementing additional measures to safeguard minority shareholders' interests from expropriation by the majority.

Suggested Citation

  • Yasser Barghathi & Poorna Sriram & Naimat U. Khan & Umair Riaz, 2025. "IFRS convergence and earnings management in India: a mixed method approach," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 21(3/4), pages 603-628.
    • Handle: RePEc:ids:ijaape:v:21:y:2025:i:3/4:p:603-628
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