The IFRS adoption, accounting quality, and banking performance: An evaluation of susceptibilities and financial stability in developing economies (original) (raw)
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Purpose-This study aims to investigate the differences in earnings quality of Malaysian companies after the adoption of IFRS-based accounting standards named FRS. Design/methodology/approach-It is hypothesize that under the new set of accounting standards, the quality of earnings reported by these companies is relatively higher. Specifically, the study tests whether the level of earnings management is significantly lower after the adoption of IFRS, and reported earnings is more value relevant during the IFRS period. This study uses a large sample of 4,010 observations over a three-year period before and a three-year period after the adoption of the new set of accounting standards. Findings-The results show that IFRS adoption is associated with higher quality of reported earnings. It is found that earnings reported during the period after the adoption of IFRS is associated with lower earnings management and higher value relevant. Originality/value-The results of this study contribute additional evidence to the literature on earnings quality and the impact of IFRS adoption. As most of the existing studies on earnings quality and IFRS have been conducted on data from the U.S and European countries, this study fills a gap in the existing literature by studying the effect of adoption of IFRS on earnings quality in an emerging market.
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ELK Asia Pacific Journal of Finance and Risk Management, 2017
Recently, international accounting standards have gone through a remarkable change for ensuring acceptability as well as understandability to the users of accounting information. International Financial Reporting Standards (IFRS) is introduced as a single set of global accounting standards with the intention to offer better transparency and comparability of the financial statement. Accordingly, it is expected that the outcome of this approach ensures better financial reporting quality by lowering the level of earnings management. This paper synthesizes previous studies on the effect of IFRS adoption on earnings management and financial reporting quality. Accordingly, it has been observed that the outcome of IFRS adoption is not conclusive. Moreover, this paper justifies the application of a new model proposed by Yoon, Miller, and Jiraporn (2006) in place of Jones' model for precise estimation of accruals in the growing economy like Bangladesh. Consequently, it is expected that the empirical study based on this model may provide better insight about the practice of earnings management in developing economy.
Prior researches have investigated the impact of mandatory International Financial Reporting Standards (IFRS) on various reporting, accounting and auditing areas. These studies recognized, in general, an increase in audit quality due to the adoption of IFRS. These studies mostly focus on Europe, while the effect of the Sarbanes-Oxley is often discussed in the United States. The effect in Ethiopia is less often a subject and this project will shed some light on the effects of mandatory adoption of IFRS in Ethiopia, while focusing on the effect on audit quality. The research consists of companies registered on the Ethiopian Banking and Financial market between 1990 and 2022. This study applies two models to evaluate audit quality in terms of discretionary accruals and discretionary expenses. The first model is the "traditional" Modified Jones Model where the results are not showing a decreased level of discretionary accruals after the adoption of IFRS. The second model is the more recently developed model by Roychowdhury, the Real Earnings Management Model. These results also indicate that there is significant association between discretionary expenses and the adoption of IFRS. This finding is in line with findings of previous researches performed in the European region (EU) and other regions. Additional analysis is required to elaborate further on the association of audit quality and the adoption of IFRS. This research has included various variables such as EBIT (earnings before interest and taxes) and ROA (return on assets), other variables (such as auditor size) were excluded due to the unavailability of data. Including these variables in future researches may add value to the results and analysis. Also, this research is conducted using the Modified Jones Model and Roychowdhury's Real Earnings Management Model to calculate respectively discretionary accruals and discretionary expenses. Other models may shed additional light on the relation between audit quality and the adoption of IFRS.
2020
This study examined the effect of IFRS adoption on the quality of financial statements of selected firms on the Ghana Stock Exchange. The study used the extent of management practices as a metric for financial statement quality. The audited annual reports of the selected firms from the GSE were analyzed using a panel regression model over the period 2001-2006 and 20072014. The study finds the adoption of IFRS to be significantly and negatively affect earnings management practices and, thus, improves financial statement quality. On the extent of earnings management practices, the study finds a decrease in the postadoption era as opposed to the pre-adoption era, signifying an improvement in accounting quality. The panel regression results show that adopting IFRS significantly decreases the extent of earnings management.
The Impact of International Financial Reporting Standards on Financial Performance
Indonesian Journal of Business Finance and Accounting, 2018
Globalization, capital market crash and the Enron's case led the accounting profession to insist on the need for a single set of high quality reporting standards. International Financial Reporting Standards (IFRS) were first adopted in 2005 by EU countries while Nigeria agreed to adopt in 2012. The question is: How does IFRS adoption improve the monetary relevance of accounting information? Several studies have explored the monetary relevance of IFRS adoption; however, they are based on foreign countries while Nigerian researches do not contain empirical evidence as they are mostly theoretical. This study therefore seeks to investigate the effect of IFRS adoption on financial performance. The study used correlation research design and data on Earnings per Share (EPS), Change in Earnings per Share (CEPS), Book Value per Share (BVPS) and net profit margin. Getting bearing from the finding of this study, it is realized that the general notion of improved value relevance with the adoption of IFRS has been confirmed. Book values and change in earnings proved value irrelevant.