Impact of IFRS Adoption on Accounting Quality in European Firms

• Type: Article in International Scientific Journal
• Date: 2010

Authors

Lopes, Claudia (Author) FEP; Cerqueira, António (Author) FEP; Brandão, Elísio (Author) FEP

Journal

Title: Journal of Modern Accounting and Auditing

Vol. 6 No. 9

Pages: 20-31

ISSN: 1548-6583

Scientific classification

FOS: Social sciences > Economics and Business

Other information

DOI: 10.17265/1548-6583/2010.09.002

Abstract (EN): In this paper it is examined whether firms following International Financial Reporting Standards (IFRS) exhibit higher accounting quality. While IFRS are supposed to improve international comparisons by harmonisation and definition of strong principles, Ball (2006) and Nobes (2006) were concerned about differences in the application of IFRS cross-countries and firms. Barth, Landsman & Lang (2008) stated that the flexibility of principles- based International Accounting Standards (IAS) could create incentives for firms to manage earnings. This paper contributes to analyse the impact of IFRS on accounting quality for European firms. The findings show that for firms in the European Union (EU) IFRS produce a negative effect on accounting quality that continues after 2005, when IFRS becomes mandatory. By contrast, for European firms which are not EU members the IFRS adoption increases accounting quality. These results support the concerns about IFRS application and flexibility and indicate that accounting quality does not improve just because the adoption of IFRS is mandatory.

Language: English

Type (Professor's evaluation): Scientific

Notes: http://www.davidpublisher.org/index.php/Home/Journal/detail?journalid=12&jx=JMAA&cont=allissues