Effects of IFRS Adoption on Tax-induced Incentives for Financial Earnings Management: Evidence from Greece

Nikolaos I. Karampinis and Dimosthenis Hevas ()

The International Journal of Accounting, 2013, vol. 48, issue 2, 218-247

Abstract: We investigate whether the adoption of International Financial Reporting Standards (IFRS) in Greece affected tax-induced incentives for financial earnings management. Prior to the implementation of IFRS, there were powerful incentives for firms facing higher tax pressure to restrict (exacerbate) upward (downward) financial earnings management due to direct tax implications. IFRS adoption reduced book–tax conformity, thereby releasing financial income from tax implications. As expected, we find that tax pressure is a significant negative determinant of discretionary accruals in the pre-IFRS period. However, this effect dissipates under the new IFRS regime.

Keywords: Book–tax conformity; IFRS adoption; Earnings management; Greece (search for similar items in EconPapers)
JEL-codes: H26 M41 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:accoun:v:48:y:2013:i:2:p:218-247

DOI: 10.1016/j.intacc.2013.04.003

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