Does accounting quality change following a switch from U.S. GAAP to IFRS? Evidence from Germany

Lin, Steve; Riccardi, William; Wang, Changjiang

doi:10.1016/j.jaccpubpol.2012.10.006

Cited by 95 publications

(58 citation statements)

References 32 publications

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“…Firms with high financial dependence, as identified by (Rajan and Zingales, 1998), include those in high-technology sectors. By analyzing only this kind of firm domiciled in Germany, Lin (2012) finds that when switching from U.S. GAAP to IFRS, the quality of financial reporting decreases. Mandatory adoption of IFRS would be far better in providing information when measurement includes performance management.…”

Section: Analysis Of Results From the Assumption Of Financial Dependementioning

confidence: 99%

Who Really Benefits from Mandatory Adoption of IFRS? A Closer Look at Preparers and Users of Financial Information

Sayumwe

Francœur

2017

RAE

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Since 1 January 2005, the European Union (EU) has mandated implementation of International Financial Reporting Standards (IFRS) for preparation of consolidated financial statements for EU-listed firms. This paper analyzes the economic impact of mandatory adoption of IFRS on firms, investors, and creditors. Relying on the positive accounting theory, we study the economic impact of the new conceptual framework of financial information from IASB (2010), especially in paragraph OB2, where investors and creditors are designated as the main users of financial information, and QC 38, which assesses whether the benefits of financial information justify the costs associated with its production and use. Our sample is composed of 2,926 European firms that adopted IFRS in 2005. Results show that firm's cost of capital declines when comparing data before and after IFRS adoption. For creditors, our results suggest that credit rating improves after IFRS adoption. However, we do not notice any significant difference in the quality of accounting earnings for investors.We also test if these results hold in the presence of asymmetric information, financial dependence and family ownership structure. Our results confirm the above trend. We conclude that the market anticipates the content of accounting data, and that mandatory adoption of IFRS has no impact on investors.

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Section: Analysis Of Results From the Assumption Of Financial Dependementioning

confidence: 99%

Who Really Benefits from Mandatory Adoption of IFRS? A Closer Look at Preparers and Users of Financial Information

Sayumwe

Francœur

2017

RAE

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“…So, we interpret a smaller value of this ratio as suggestive of earnings smoothing and manipulation. (Cai, Rahman, & Courtenay, 2014;Lin, Riccardi, & Wang, 2012).…”

Section: Earnings Smoothingmentioning

confidence: 99%

“…(Barth et al, 2008;Iatridis, 2010;Dimitropoulos et al, 2013;Doukakis, 2010). On the other hand, other researchers showed that the flexibility inherent in IFRS might provide greater opportunities for firms to manage earnings (Lin et al, 2012).…”

Section: Conclusion and Future Research Directionsmentioning

confidence: 99%

Accounting Manipulations and IFRS: Evidence from French Companies

Nouri¹,

Abaoub²

2014

IJEF

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This paper examines the impact of mandatory adoption of international accounting standards on the income smoothing and earning management. Using a simple of French firms indexed in the CAC all tradable for a period of ten years (2000-2009), we find convincing evidence that the implantation of IFRS contributed to less income smoothing and earning management compared to the local accounting standards, even during the recent economic crisis. Less earning manipulation assures higher levels of reliability information.

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“…Henry et al2009;Barth et al 2012;and Wang, 2014) as well the change in accounting quality after firms switch from U.S. GAAP to IFRS (e.g. Lin et al 2012). …”

Section: Yip and Yang 2012)mentioning

confidence: 99%

Essays on the U.S. GAAP-IFRS Convergence Project, the Nature of Accounting Standards, and Financial Reporting Quality

Sawani¹

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Does accounting quality change following a switch from U.S. GAAP to IFRS? Evidence from Germany

Cited by 95 publications

References 32 publications

Who Really Benefits from Mandatory Adoption of IFRS? A Closer Look at Preparers and Users of Financial Information

Who Really Benefits from Mandatory Adoption of IFRS? A Closer Look at Preparers and Users of Financial Information

Accounting Manipulations and IFRS: Evidence from French Companies

Essays on the U.S. GAAP-IFRS Convergence Project, the Nature of Accounting Standards, and Financial Reporting Quality

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