Does mandatory adoption of IFRS affect accrual and real earnings management activities of European industrial firms?

Chun Mak, Samur Mustafayev Mubariz

Research output: Contribution to conference (unpublished)Paperpeer-review

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Abstract

This study investigates the impact of mandatory adoption of IFRS on European industrial firms’ accrual and real earnings management activities. We focus on (i) the sole effect of mandatory adoption of IFRS on these earnings management activities in the post-IFRS adoption period; (ii) the effect of the variations in enforcement of accounting standards; and (iii) the effect of firm-level incentives of reporting. The results show that there are significant declines in accrual and real earnings management in the post-IFRS adoption period for mandatory IFRS adopters relative to non-IFRS adopters. This decline in earnings management is experienced mostly by mandatory IFRS adopters operating in countries with strong enforcement of accounting standards. Firm-level incentives of reporting associate with accrual and real earnings management significantly.
Original languageEnglish
Publication statusAccepted/In press - 10 Feb 2017
Event40th Annual Congress of the European Accounting Association - University of Valencia, Valencia, Spain
Duration: 10 May 201712 May 2017

Conference

Conference40th Annual Congress of the European Accounting Association
Country/TerritorySpain
CityValencia
Period10/05/1712/05/17

Keywords

  • IFRS, enforcement, real activities-based earnings management, accrual earnings management.

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