Article2013

Effect of the Mandatory Adoption of IFRS on Real and Accruals-based Earnings Management: Empirical Evidence From France

33 citations0/0 files storedInternational Journal of Accounting and Economics Studies

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Auditing, Earnings Management, Governance Accounting and Organizational Management Corporate Governance and Financial Management

Abstract

The main purpose of this study is to examine whether the mandatory IFRS adoption within French listed companies provides higher earnings quality. More precisely, we study the impact of mandatory IFRS adoption on two approaches of earnings management: real and accruals-based earnings management. This study focuses on a sample of 1488 firm-year observations, 124 firms drawn from the 250 French-listed companies during the period from 1999 to 2011. We use the panel data for our analysis. Specifically, the FGLS estimator method is conducted in our regression models. Our results indicate that the absolute value of discretionary accruals is significantly reduced six years after the mandatory adoption of IFRS. We also find a negative association between the real earnings management and the mandatory adoption of IFRS. Overall, we can deduce that earnings quality is improved in the post-IFRS period in the French context. Keywords: Accruals-based earnings management; International Financial Reporting Standards (IFRS); Real earnings management.

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References

1976Theory of the firm: Managerial behavior, agency costs and ownership structure 1995Detecting Earnings Management.2005The economic implications of corporate financial reporting 2003Earnings Management through Real Activities Manipulation 2003Earnings management and investor protection: an international comparison 1999A Review of the Earnings Management Literature and Its Implications for Standard Setting 2012Detecting Earnings Management 1985The effect of bonus schemes on accounting decisions

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2023The bridge to quality financial reporting: Audit committees’ mediating role in IFRS implementation for emerging markets 2016The Effects of Financial Reporting Standards on Tax Avoidance and Earnings Quality: A Case of an Emerging Economy 2016The Impact of International Financial Reporting Standards (IFRS) on Earnings Management: A Review of Empirical Evidence 2018Adopsi IFRS, Manajemen Laba Akrual dan Manajemen Laba Riil 2015Incentives and Constraints of Real Earnings Management: The Literature Review

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