IDEAS home Printed from https://ideas.repec.org/a/ids/ijcrac/v10y2018i2p97-129.html
   My bibliography  Save this article

Politically connected firms and the effectiveness of International Financial Reporting Standards adoption

Author

Listed:
  • Madeline Trimble

Abstract

In response to the ongoing debate about whether IFRS has improved accounting quality, I introduce a new firm-level determinant of effective IFRS adoption: the political connectedness of a firm. Established political connections recognise value from firms, which they reward with shielding from enforcement agencies and/or providing financial resources outside of capital markets. By using the exogenous shock of mandatory IFRS adoption in the EU, I isolate the effect that political connections have on discretionary accounting choices. I find that although accounting quality is ex ante and ex post lower for politically connected firms with top executives in federal roles, there is no incremental difference in the positive effect of IFRS adoption relative to non-connecting firms. This finding suggests that political connections are not fully immune to IFRS effects, and yet the role of political connections is not completely negated by mandated IFRS adoption.

Suggested Citation

  • Madeline Trimble, 2018. "Politically connected firms and the effectiveness of International Financial Reporting Standards adoption," International Journal of Critical Accounting, Inderscience Enterprises Ltd, vol. 10(2), pages 97-129.
    • Handle: RePEc:ids:ijcrac:v:10:y:2018:i:2:p:97-129
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=92319
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijcrac:v:10:y:2018:i:2:p:97-129. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=328 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.