The persistence of earnings and earnings components after the adoption of IFRS

Doukakis, Leonidas C.

doi:10.1108/03074351011081286

Cited by 55 publications

(38 citation statements)

References 34 publications

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“…Kabir, Laswad, and Islam () found evidence of increased earnings management in the post‐IFRS adoption period in New Zealand. Similarly, Doukakis () found that the mandatory adoption of IFRS in Greece did not result in any change in earnings persistence or the information content of earnings.…”

Section: Literature Reviewmentioning

confidence: 94%

Do IFRS‐Based Earnings Announcements Have More Information Content than Canadian GAAP‐Based Earnings Announcements?

Khan

Anderson

Warsame

et al. 2015

Accounting Perspectives

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Using an event-study methodology, this study investigates whether the information content of earnings announcements changed for firms traded on the Toronto Stock Exchange (TSX) and the Canadian Venture Exchange (TSXV) following mandatory adoption of International Financial Reporting Standards (IFRS) in Canada. A priori, it may be argued that the information content of earnings would increase for both TSX and TSXV firms if IFRS earnings provided more value-relevant information than Canadian GAAP earnings. Increased value relevance of information provided by IFRS earnings would likely reflect increased measurement of changes in net asset values based on expectations as opposed to realizations. Because values based on expectations are subject to greater divergence of opinion than values based on realizations, greater value relevance is likely to be accompanied by higher abnormal return volatility and abnormal trading volume during announcement periods. Consistent with this argument, we find that abnormal volatility and abnormal volume during earnings announcement periods were higher in post-IFRS announcement periods than in pre-IFRS announcement periods for firms traded on the TSX. We discriminate across the two exchanges in terms of information quality based on the mix of institutional and retail investors, analyst following, concentration in the oil, gas and mining sectors, and size of firm. We test for a residual difference in information content based on the more speculative nature of the TSXV exchange and find some evidence that divergence of opinion was higher for TSXV firms than TSX firms in the pre-IFRS period but this residual difference does not carry through to the post-IFRS period.

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Section: Literature Reviewmentioning

confidence: 94%

Do IFRS‐Based Earnings Announcements Have More Information Content than Canadian GAAP‐Based Earnings Announcements?

Khan

Anderson

Warsame

et al. 2015

Accounting Perspectives

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“…Management incentives and national institutional factors play more important roles in reporting quality. Doukakis [44] analyzed whether the adoption of IFRS materially affects the persistence, as well as the explanatory power of earnings and earnings components of two years before and two years after the adoption of IFRS in Greece and confirmed that disaggregating reported earnings into operating income, non-operating income and extraordinary charge and credit, captures differences in the information content of the underlying events thereby earnings disaggregation can be used to improve prediction of future profitability. The results reveal that IFRS measurement and reporting guidelines do not appear to improve the persistence of earnings and earnings components.…”

Section: Ifrs Adoption and Earning Managementmentioning

confidence: 95%

IFRS Adoption and Financial Reporting Quality: A Review of Evidences in Different Jurisdictions

Nijam

Jahfer

2016

ILSHS

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Abstract. Conventional and commonly held wisdom with respect to the adoption of International Financial Reporting Standards (IFRS) is that they lead to improved financial reporting quality and comparability and thereby favorable economic consequences. There are however contradicting evidences disproving this conventional wisdom or rejecting its gross generalization over the entire jurisdictions harmonizing on IFRS. Driven by this fact, quests for knowledge about the dynamics and contexts that lead to differential effects of IFRS get momentum. In an attempt to explore the insight into the effects of international accounting harmonization by way of IFRS adoption, this paper reviews selected literatures on consequences of IFRS adoption. This review discusses some empirical evidences that have been reported in various countries that include Europe, USA, United Kingdom, Germany, Spain, Norway, Greece, Poland, Belgian, France, Italy, Turkey, United Arab Emirates (UAE), Kuwait, Jordan, China, Malaysia, Australia, Hong Kong, New Zealand, Kenya and Nigeria. Our review focuses on the aspects of value relevance, disclosure quality, cost of capital, earning management and financial statement impact due to the IFRS adoption. This review reveals that economic consequences of IFRS adoption significantly differ across jurisdictions though being its impact reported to be positive in majority of cases. There are also notable number of studies that report indifferent and or negative effects of IFRS adoption. When IFRS studies report mixed evidence with respect to value relevance of book value of equity and earing, book value of equity supersedes the earning parameters. IFRS are found to supersede many other domestic financial reporting standards in terms of volume and quality of disclosures in financial statements. This review also obtains that IFRS' impact on the reduction of cost of capital depends on financial reporting incentives, law enforcement, types of legal systems and various other country and capital market specific characteristics. Further, though there are some evidences to the contrary, the quality of earnings reported under IFRS has been established to be superior to that under other local standards.

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“…Researchers showed that the standard IFRS, due to their principles, reduces the opportunist practices of the earning management. (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: 98%

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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The persistence of earnings and earnings components after the adoption of IFRS

Cited by 55 publications

References 34 publications

Do IFRS‐Based Earnings Announcements Have More Information Content than Canadian GAAP‐Based Earnings Announcements?

Do IFRS‐Based Earnings Announcements Have More Information Content than Canadian GAAP‐Based Earnings Announcements?

IFRS Adoption and Financial Reporting Quality: A Review of Evidences in Different Jurisdictions

Accounting Manipulations and IFRS: Evidence from French Companies

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