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The Effect of International Accounting Standards on Management Behavior: A Study on Earnings Management Behavior in Countries with High Investor Protection

In: Leadership, Innovation and Entrepreneurship as Driving Forces of the Global Economy

Author

Listed:
  • Benno Feldmann

    (University of Applied Sciences Worms)

  • Tiet Khanh Le

    (University of Applied Sciences Worms)

Abstract

The objective of this study is to examine the effect of the international financial reporting standards (IFRS) implementation on earnings management behavior in countries with high investor protection and strong legal enforcement. It does this by looking at a sample of 199 public listed companies from seven selected countries over a period of 15 years (before and after IFRS adoption). The results of this study suggest that in high investor protection countries, earnings management in general and accrual-based earnings management (AEM) in particular are more implemented during the IFRS application period than during the national generally accepted accounting principles (GAAP) application period. The study also suggests that earnings reports are more manipulated when firms face financial distress. However, it does not have enough evidence to conclude that real earnings management (REM) is more or less practiced after the transition to IFRS and whether there is a substitutional relationship between REM and AEM.

Suggested Citation

  • Benno Feldmann & Tiet Khanh Le, 2017. "The Effect of International Accounting Standards on Management Behavior: A Study on Earnings Management Behavior in Countries with High Investor Protection," Springer Proceedings in Business and Economics, in: Rachid Benlamri & Michael Sparer (ed.), Leadership, Innovation and Entrepreneurship as Driving Forces of the Global Economy, chapter 0, pages 411-422, Springer.
    • Handle: RePEc:spr:prbchp:978-3-319-43434-6_35
    DOI: 10.1007/978-3-319-43434-6_35
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