Matching between revenues and expenses and the adoption of International Financial Reporting Standards

Kai Jin, Yaowen Shan and Stephen Taylor

Pacific-Basin Finance Journal, 2015, vol. 35, issue PA, 90-107

Abstract: We examine changes in the matching between contemporaneous revenues and expenses in Australian financial reporting. Matching is fundamental to the economic demand for accrual accounting in preference to simple cash measures. Our results indicate that the revenue–expense relation has declined in Australia during 2001–2005, but improved following implementation of International Financial Reporting Standards (IFRS). The improvement is largely attributable to increases in the association of operating expenses and “other” expenses with contemporaneous revenues. These results are in sharp contrast to documented declines in matching among US firms, and also highlight a positive outcome associated with Australian firms' mandatory adoption of IFRS.

Keywords: Matching; IFRS; Revenues and expenses (search for similar items in EconPapers)
JEL-codes: M40 M41 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:35:y:2015:i:pa:p:90-107

DOI: 10.1016/j.pacfin.2014.10.008

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