Repository logo
 

Secrecy and Mandatory IFRS Adoption on Earnings Quality

Loading...
Thumbnail Image

Date

2015

Journal Title

Journal ISSN

Volume Title

Publisher

Te Herenga Waka—Victoria University of Wellington

Abstract

This study examines the effect of mandatory IFRS adoption on earnings quality in countries which exhibit high financial secrecy. Earnings quality is proxied by signed abnormal accruals and earnings conservatism. Using 19,324 firm-years from 14 countries over the period 1998-2011, we find that firms in a high-secrecy country tend to report higher abnormal accruals and earnings conservatism, which results in lower earnings quality. On the other hand, we find that mandatory IFRS adoption improves earnings quality by decreasing abnormal accruals and earnings conservatism. Our study provides evidence of the interaction between national culture, as indicated by secrecy, and IFRS adoption and helps to explain differences in earnings quality across different jurisdictions following IFRS adoption.

Description

Keywords

Earnings quality, national culture, secrecy, mandatory IFRS adoption, signed abnormal accruals, earnings conservatism

Citation