Setting the Bar: Earnings Management During a Change in Accounting Standards

Čapkun, Vedran; Cazavan-Jeny, Anne; Jeanjean, Thomas; Weiss, Lawrence A.

doi:10.2139/ssrn.1870007

Cited by 21 publications

(18 citation statements)

References 43 publications

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“…Marra et al (2011) specifically elevate issue of corporate governance in performing new accounting standards, due after application of IFRS the role of corporate governance and auditor quality are expected to be more effective in declining the level of earnings management. The application of IFRS that becomes main issue in this research, refers to previous research which is more focus on the setting that is exist in Europe, such as some researches that had performed by Van Tendeloo and Vanstraelen (2005), Capkun et al (2011), Daske and Gebhardt (2006), Daske et al (2008), Christensen et al (2008), Marra et al (2011) and Zéghal et al (2011). This is due to the application of IFRS is applicable earlier in some big parts of Europe countries.…”

Section: Introductionmentioning

confidence: 99%

“…Methodology contribution expected that may be provided on this study is the use of proxy of double post that perform by audit committee member that involves in the structure of corporate governance with other post that is in the structure of corporate governance. This study on the application of IFRS in the foregoing is as Barth et al (2008), Lang et al (2003), Capkun et al (2011), Zéghal et al (2011, Marra et al (2011), Daske et al (2008) and Doukakis (2014) only using before and after application of IFRS category to measure the application of IFRS. This study uses three levels of application of IFRS, one that has not been applied, partly applied and completely applied the IFRS.…”

Section: Introductionmentioning

confidence: 99%

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Implementation the International Financial Reporting Standards as a Moderating Variable of the Relationship of Corporate Governance with Earnings Management

Komalasari¹

2017

ERSJ

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In general, this research is aimed at providing empirical evidence concerning the analysis of the adoption of IFRS as a moderating variable in the relation of corporate governance with earnings management. In particular, there are two objectives in this research, first, to provide empirical evidence concerning the analysis of the adoption of IFRS as a moderating variable in the relation between the independent of commissioners to the number of board of commissioners and earnings management; second, to analyze the adoption of IFRS as a moderating variable in the relation between the dual position audit committee members and earnings management. The research was conducted on companies listed on the Stock Exchanges of Germany, Denmark, France, and the Netherlands from 2002 to 2013. It primarily employed agency theory. Moreover, it employed primary variables including adoption of IFRS, corporate governance, in particular the proportion of independent commissioners to the board of commissioners, dual positions of audit committee members and earnings management.The test results in this research conclude that: the results of testing of the model of accrual earnings management with the samples of companies listed on the stock exchanges of Germany, France, the Netherlands and Denmark indicated that the adoption of IFRS strengthened negative relation of the proportion of independent commissioners to the number of board of commissioners with accruals earnings management, so that the hypothesis 1 was acceptable. The hypothesis 2 stating the adoption of IFRS strengthen negative relation between the multi position of audit committee members and accrual earnings management was acceptable.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Implementation the International Financial Reporting Standards as a Moderating Variable of the Relationship of Corporate Governance with Earnings Management

Komalasari¹

2017

ERSJ

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“…Many studies in this context expect that the transparency and comparability of companies' financial statements will increase, and some report whether IFRS adoption has subsequently achieved its original goals in global financial markets including Korea (Barth et al, 2008;Christensen et al, 2008;Daske et al, 2008;Capkun et al, 2011;Choi et al, 2011;Yip and Yong, 2012;Cascino and Gassen, 2012;Landsman et al, 2012).…”

Section: Introductionmentioning

confidence: 99%

Changes in the value relevance of accounting information before and after the adoption of K-IFRS: evidence from Korea

Kwon

2018

AAJFA

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This paper aims to investigate the value relevance change before and after the mandatory adoption of Korea's international financial reporting standards (K-IFRS) in the listed Korean financial markets. This paper tests the value relevance change by dividing sample data into the periods before (2008-2010) and after (2011-2013) K-IFRS adoption. This study categorises sample data into several subgroups by firm size (large versus small and medium) and applicable financial market (KOSPI versus the KOSDAQ) for revealing further evidence of the value relevance change in Korean companies. The empirical results in this paper suggest that the value relevance of book value, accounting earnings, operating income, cash flows, and operating cash flows significantly changed before and after K-IFRS adoption. This paper's evidence suggests the possibility of a new debate regarding the primary value relevant factor before and after K-IFRS adoption among the companies listed on the Korea Stock Exchange.

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“…The opportunistic use of specific exemptions under IFRS 1 First time adoption of International Financial Reporting Standards (IFRS 1), and other options that present themselves upon transition have also been documented in the recent literature. Capkun et al (2012), Ahmed et al (2012) and Cormier et al (2009) present evidence of opportunism and earnings management on transition to IFRS for European companies. This evidence is in line with studies pointing to a limited role for accounting standards in determining reporting quality and highlighting the importance of firms' reporting incentives (Ball, 2006;Burgstahler et al, 2006;Daske et al, 2013).…”

Section: Research Questionsmentioning

confidence: 90%

Environmental Liabilities and Diversity in Practice Under International Financial Reporting Standards

Michelon

Schneider²,

Maier

2014

SSRN Journal

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Purpose-Our purpose is to encourage accounting regulators to address diversity in practice in the reporting of environmental liabilities. When Canada changed to IFRS in 2011, Canadian regulators asked the IFRS Interpretations Committee to interpret whether the discount rate to value environmental liabilities should be a risk-free one. Old Canadian GAAP and current US GAAP allow for a higher discount rate, resulting in commensurately lower environmental liabilities. International regulators refused to address this issue expecting no diversity in practice in Canada. Design/methodology/approach-The focus is on a sample of Canadian oil and gas and mining firms. These domestic industries play a major role internationally and have significant environmental liabilities. The method is empirical archival, tracking firm characteristics and discount rate choice on transition to IFRS. Findings-We show that there is significant diversity in practice. About one third of the sample firms choose a higher discount rate, avoiding a major increase in environmental liabilities on transition to IFRS. The evidence suggests that these firms had relatively larger environmental liabilities and that the discount rate decision is a strategic choice. Research limitations/implications-The sample is based on one country and may only be reflecting local anomalies that have no broader implications. Practical implications-Diversity in practice in accounting for environmental liabilities is not acceptable. Accounting regulators should act to create consistent and comparable reporting practice. Social implications-Firms and managers facing larger environmental liabilities can choose to minimize environmental liabilities under IFRS, while it is the general public and society at large that bear the ultimate risk. Originality/value-The paper pushes forward the debate on whether recognised environmental liabilities should reflect the interests of equity investors, or if other investors and stakeholders should be taken into account.

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Setting the Bar: Earnings Management During a Change in Accounting Standards

Cited by 21 publications

References 43 publications

Implementation the International Financial Reporting Standards as a Moderating Variable of the Relationship of Corporate Governance with Earnings Management

Implementation the International Financial Reporting Standards as a Moderating Variable of the Relationship of Corporate Governance with Earnings Management

Changes in the value relevance of accounting information before and after the adoption of K-IFRS: evidence from Korea

Environmental Liabilities and Diversity in Practice Under International Financial Reporting Standards

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