Mandatory IFRS adoption and earnings management: The role of culture

Kevin C.K. Lam, Heibatollah Sami, Jun Yao and Yiwei Yao

Journal of International Accounting, Auditing and Taxation, 2023, vol. 50, issue C

Abstract: Using a sample of 7936 firm-year observations and 922 International Financial Reporting Standards (IFRS) adopter firms from 19 countries that mandated IFRS adoption in 2005 and 922 benchmark firms from 8 countries that did not mandate IFRS adoption in the sample period, we examine the role of trust in the effect of IFRS adoption on earnings management. Consistent with our predictions, we find (1) the earnings management-increasing effect of IFRS adoption is more pronounced in low trust countries/societies after control for country-level institutions, and (2) IFRS adoption decreases total earnings management in high trust countries/societies.

Keywords: IFRS; Mandatory adoption; Earnings management; Trust; Culture (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jiaata:v:50:y:2023:i:c:s106195182300006x

DOI: 10.1016/j.intaccaudtax.2023.100527

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