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Economic Consequences of Accounting Enforcement Reforms: The Case of Germany


  • Jürgen Ernstberger
  • Michael Stich
  • Oliver Vogler


This study investigates recent reforms in financial reporting enforcement in Germany. The objective of these reforms was to promote a consistent and faithful application of accounting standards. Using a difference-in-differences approach, we find some evidence of a decrease in earnings management, an increase in stock liquidity, and, to a limited extent, an increase in market valuation for companies that fall under the new enforcement regime. Our results also provide some support for the notion that companies characterized by an overall low level of enforcement through other internal and external mechanisms are particularly affected by these reforms. The results are largely robust in several sensitivity analyses, but the results must be interpreted with caution because we cannot completely rule out the possibility of other explanations.

Suggested Citation

  • Jürgen Ernstberger & Michael Stich & Oliver Vogler, 2012. "Economic Consequences of Accounting Enforcement Reforms: The Case of Germany," European Accounting Review, Taylor & Francis Journals, vol. 21(2), pages 217-251, August.
  • Handle: RePEc:taf:euract:v:21:y:2012:i:2:p:217-251
    DOI: 10.1080/09638180.2011.628096

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    Cited by:

    1. Fülbier, Rolf Uwe & Klein, Malte, 2013. "Financial accounting and reporting in Germany: A case study on German accounting tradition and experiences with the IFRS adoption," Bayreuth Working Papers on Finance, Accounting and Taxation (FAcT-Papers) 2013-01, University of Bayreuth, Chair of Finance and Banking.
    2. repec:eee:spacre:v:18:y:2015:i:1:p:87-98 is not listed on IDEAS

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