An exploratory study of earnings management detectability, analyst coverage and the impact of IFRS adoption: Evidence from China

Yongtao, Cang; Yi-yun, Chu; Lin, Thomas W.

doi:10.1016/j.jaccpubpol.2014.04.003

Cited by 44 publications

(66 citation statements)

References 41 publications

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“…In the case of Brazil, Pelucio-Grecco et al (2014) show that the implementation of full IFRS plays a restrictive role on EM in listed companies. On the contrary, Callao and Jarne (2010) and Cang et al (2014) indicate that, for the EU and China, the adoption of these standards is positively associated with EM. Both studies agree in stating that IFRS make financial information more flexible and subjective, through the criteria for the valuation and recognition of the elements of the financial statements, among which the use of reasonable value stands out.…”

Section: Review Of the Literature And Proposal Of The Hypothesesmentioning

confidence: 92%

“…Thus, although it is to be expected that the IFRS favor an improvement in the quality of financial information, as they are high-quality standards (in relation to many generally accepted accounting principles used locally in the EU), it is also true that they significantly rely on the use of professional judgment and private information from companies, which along with valuation criteria such as fair value, provide greater flexibility to management when it comes to preparing financial statements (Barth et al, 2008;Callao & Jarne, 2010;Cang et al, 2014;Daske et al, 2008;Doukakis, 2014;Jeanjean & Stolowy, 2008).…”

Section: Hypothesismentioning

confidence: 99%

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Impact of IFRS on the quality of financial information in the United Kingdom and France: Evidence from a new perspective

Peña

Franco

2017

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Findings: Firm size influences the impact of IFRS in the UK, and the financial information of larger firms seems to have improved after IFRS adoption. In the case of France, the results do not support any improvement in the quality of the financial information after IFRS were put in place. Research limitations/implications:This research applies a new methodological approach to study the impact of IFRS adoption, but additional inquires on the subject are surely required.-850-Intangible Capital -https://doi.org/10.3926/ic.939Practical implications: Certain features of the countries, such as the Common Law legal system and enforcement, could explain why the quality of the financial information for large firms has increased following the adoption of IFRS. It seems that the implementation of IFRS has given investors additional elements with which to ascertain a firm's ability to generate future cash flows. Social implications:The adoption of IFRS, by itself, is not enough to improve the quality of financial information. Thus, regulators in countries adopting IFRS should consider additional reforms to ensure that the desired results are achieved.Originality/value: This work overcomes the methodological design problems of previous research, such as sample selection bias, the inclusion of observations close to the year of mandatory adoption, the heterogeneity of each country and the size of the analyzed companies.To the best of our knowledge, this research is the first to test the effect of IFRS adoption in the European context, using the relation between idiosyncratic risk and the opacity of financial reports.

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Section: Review Of the Literature And Proposal Of The Hypothesesmentioning

confidence: 92%

Section: Hypothesismentioning

confidence: 99%

Impact of IFRS on the quality of financial information in the United Kingdom and France: Evidence from a new perspective

Peña

Franco

2017

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“…While BLIEM easier to detect, because it is a reflection of abnormal activity of business (exceptional items) of companies with related information, which are limited and easy to find. [5] found that analyst coverage is negatively related to BLIEM proving the monitoring effect and the effect was also found that analyst coverage is positively related to ALIEM proving the pressure effect. But in other studies, particularly for ALIEM, many found that analyst coverage has a negative impact on ALIEM [1][2] [3][6] The emergence of these two effects, both monitoring or pressure, which occurs as a result of the level of analyst coverage on ALIEM, shows that there are other factors that can affect the level of earnings management detectability.…”

Section: Introductionmentioning

confidence: 73%

“…The effects arising from analyst coverage is highly dependent on the level of detection of the earnings management [5]. When an earnings management is easier to detect, the effects that tend to arise from analyst coverage is monitoring effect.…”

Section: Introductionmentioning

confidence: 99%

“…But in other studies, particularly for ALIEM, many found that analyst coverage has a negative impact on ALIEM [1][2] [3][6] The emergence of these two effects, both monitoring or pressure, which occurs as a result of the level of analyst coverage on ALIEM, shows that there are other factors that can affect the level of earnings management detectability. [5] found that the level of earnings management detectability can be influenced by the information environment within the jurisdiction of the country where the company is located and the adoption of IFRS. [5] found that the adoption of IFRS may increase the detectability of earnings management in the enterprise by improving the quality and comparability of financial statements.…”

Section: Introductionmentioning

confidence: 99%

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The Impact of IFRS Adoption on Relationship between Analyst Coverage and Earnings Management in ASEAN 5

Putra¹,

Mita²

2019

Proceedings of the Proceedings of the 1st Sampoerna University-Afbe International Conference, SU-AFBE 2018, 6-7 December 2018,

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This research aims to give empirical evidence to prove whether the adoption of IFRS affect the relationship between analyst coverage and earnings management. This research includes 4 years period data sample on companies in ASEAN 5 countries (Singapore, Malaysia, Philippines, Indonesia and Thailand). The result shows that (1) analyst coverage can curbs earnings management behavior in both types of earnings management. This demonstrates the ability of the analyst in the external mechanisms of corporate governance. (2) IFRS adoption can curbs earnings management through above-the-line items (ALIEM), but had no significant effect on earnings management through below-the-line items (BLIEM). (3) Contrary to expectations, there is no difference in the effect of analyst coverage on both types of earnings management in the period before and after the adoption of IFRS. This may be due to financial analysts have better skills and more resources, when compared to other users in the use of the financial statements. In conclusion, without the adoption of IFRS, the analyst can use their analysis capabilities in using and understanding the financial statements.

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How does investor attention affect energy firms' managerial opportunistic behavior? New evidence from China

et al. 2023

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The energy sector plays a crucial role in facilitating the low‐carbon energy transition. However, in the absence of appropriate environmental regulation, managerial opportunistic behavior in energy firms can manipulate ethical investor perceptions and hinder the real transition process towards clean energy. Using Chinese listed energy firms as the research setting, this paper examines the impact of investor attention on energy firms' earnings management practices. In both clean and traditional energy firms, the results show a significant U‐shaped association between investor attention and earnings management, with the U‐shaped curve for clean energy firms being smoother. This U‐shaped relationship is more pronounced in energy firms with larger size and weaker external monitoring. Moreover, the mediating analysis shows that internal control quality transmits the impact of investor attention onto earnings management practices in the energy sector. Our key findings remain robust to a battery of robustness tests and endogeneity controls. Therefore, given the growing attention on the energy sector, this study extends the existing literature on energy firms' managerial opportunistic behavior by analyzing the nonlinear effect for investor attention and provides practical implications for curbing energy firms' managerial opportunistic activities and guiding managerial attention towards making real sustainable investments, thereby promoting clean energy transition and sustainable development.

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An exploratory study of earnings management detectability, analyst coverage and the impact of IFRS adoption: Evidence from China

Cited by 44 publications

References 41 publications

Impact of IFRS on the quality of financial information in the United Kingdom and France: Evidence from a new perspective

Impact of IFRS on the quality of financial information in the United Kingdom and France: Evidence from a new perspective

The Impact of IFRS Adoption on Relationship between Analyst Coverage and Earnings Management in ASEAN 5

How does investor attention affect energy firms' managerial opportunistic behavior? New evidence from China

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