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 language | English |
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| Publication status | Accepted/In press - 10 Feb 2017 |
| Event | 40th Annual Congress of the European Accounting Association - University of Valencia, Valencia, Spain Duration: 10 May 2017 → 12 May 2017 |
Conference
| Conference | 40th Annual Congress of the European Accounting Association |
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| Country/Territory | Spain |
| City | Valencia |
| Period | 10/05/17 → 12/05/17 |
Keywords
- IFRS, enforcement, real activities-based earnings management, accrual earnings management.