Differences in earnings management between firms using US GAAP and IAS/IFRS

Abstract

2013),"Earnings quality and the adoption of IFRS-based accounting standards: Evidence from an emerging market", Asian Review of Accounting, Vol. 21 Iss 1 pp. 53-73 http://dx.If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to examine whether the relatively rules-based US Generally Accepted Accounting Principles (GAAP) and the more principles-based International Accounting Standards/International Financial Reporting Standards (IAS/IFRS) provide different opportunities for earnings management (EM). Such an examination is critical as the world moves toward principles-based standards. Design/methodology/approach -Financial information for the fiscal years 1999-2004 from the annual reports of firms listed under the Prime Standard on the Germany Frankfurt Stock Exchange is analyzed. Data from the German Frankfurt Stock Exchange are used to resolve the difficulty in comparing accounting standards across different markets and countries with different institutional factors and corporate governance issues. The unique feature of dual listing in the German Frankfurt Stock

The role of accrual estimation errors to determine accrual and earnings quality

“…They find that the earnings management through accruals decreased after using the new set of standards in China. Similar to prior findings, Liu et al (2014) demonstrate that earnings management through accruals is not significantly different between US GAAP and IAS/IFRS firms. According to earlier research, earnings management has a strong association with earnings quality.…”

The Effects of International Financial Reporting Standards on Reporting Quality of Financial Institutions in Ghana

“…Several studies have been conducted to compare various national accounting standards (GAAP) to the much-acclaimed transparent reporting standards (IFRS) using various proxies. For instance, studies which compared the US rules-based GAAP with the more principles-based (IAS/IFRS) on the basis of their ability to reduce earnings management found no significant difference in earnings management through accruals except that earnings management is significantly higher under research and development investment for firms reporting under IAS/IFRS (Liu et al, 2014). The superiority of US GAAP relative to IFRS is also evident in terms of its future cash flow predictability (Atwood et al, 2011).…”

Institutional Investors, Real Earnings Management and Cost of Equity: Evidence from Listed High-tech Firms in China

“…In the literature, many studies (Francoeur et al,2012;Datta et al, 2013;Chiu, et al,2013;Kangarluei et al, 2011;Essid, 2012;Caton et al,2011;He et al, 2011Degeorge et al, 2013Hansen, 2010;Liu et al, 2014;Sun et al, 2014) related to earnings management focus only on identifying related factors that can significantly affect earnings management. However, these factors have not been used directly to forecast the level of earnings management in advance (Tsai & Chiou, 2009).…”

“…However, these factors have not been used directly to forecast the level of earnings management in advance (Tsai & Chiou, 2009). Previous research has also examined earnings management by considering the decomposition of total accruals into their abnormal and discretionary components (Louis, 2004;Matsumoto, 2002;Roychowdhury, 2006;Jones, 1991;Dechow, et al,1995;Liu et al,2014;Patro and Pattanayak, 2014;Greiner, 2015). The conventional earnings management (i.e., linear accrual) models assume that the slope coefficients are constant within the sample, which means that observations in the sample have a uniform accrual-generating process (Bartov et al, 2000).…”