Expectation Gap Analysis in Corporate Financial Reporting Practices in India
01 Feb 2021-Management and labour studies (SAGE PublicationsSage India: New Delhi, India)-Vol. 46, Iss: 1, pp 38-58
TL;DR: In this paper, the expectation gap of the practitioners and investors on the selected four parameters regarding India's corporate reporting practices and in a curtail period of Inteface period was assessed.
Abstract: This article assesses the expectation gap of the practitioners and investors, if any, on the selected four parameters regarding India’s corporate reporting practices and in a curtail period of Inte...
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01 Jan 2005
TL;DR: In this paper, the authors investigate whether German companies that have adopted IFRS engage significantly less in earnings management compared to German companies reporting under German generally accepted accounting principles (GAAP), while controlling for other differences in earningsmanagement incentives.
Abstract: Abstract This paper addresses the question whether voluntary adoption of International Financial Reporting Standards (IFRS) is associated with lower earnings management. Ball et al. (Journal of Accounting and Economics, 36(1–3), pp. 235–270, 2003) argue that adopting high quality standards might be a necessary condition for high quality information, but not necessarily a sufficient one. In Germany, a code-law country with low investor protection rights, a relatively large number of companies have chosen to voluntarily adopt IFRS prior to 2005. We investigate whether German companies that have adopted IFRS engage significantly less in earnings management compared to German companies reporting under German generally accepted accounting principles (GAAP), while controlling for other differences in earnings management incentives. Our sample, consisting of German listed companies, contains 636 firm-year observations relating to the period 1999–2001. Our results suggest that IFRS-adopters do not present different earnings management behavior compared to companies reporting under German GAAP. These findings contribute to the current debate on whether high quality standards are sufficient and effective in countries with weak investor protection rights. They indicate that voluntary adopters of IFRS in Germany cannot be associated with lower earnings management.
533 citations
TL;DR: In this paper , the effect of the converged version of the International Financial Reporting Standards (IFRS) on the performance of the Indian-listed manufacturing firms has been investigated and the results indicated that full adoption rather than convergence could reap the benefits of the IFRS.
Abstract: PurposeThe study has endeavored to assay the nexus between the converged version of the International Financial Reporting Standards (IFRS) on the performance of the Indian-listed manufacturing firms.Design/methodology/approachThe study has randomly accessed the data of the Bombay Stock Exchange (BSE) listed Indian manufacturing firms using the Prowess IQ database. It has covered 2014–2016 as pre-IFRS and 2017–2020 as the post-IFRS convergence period. Moreover, the study has followed a longitudinal research design with cross-sectional time-series data and has used the difference-in-difference (DiD) technique to assess the effect of the IFRS convergence on firm performance (FP).FindingsThe results have indicated that the adoption of the Indian Accounting Standards (Ind AS) has unlikely reported better FP. It has concurred policy implications as full adoption rather than convergence could reap the benefits of the IFRS.Originality/valueIt has contributed to the existing body of knowledge by assaying the effect of the IFRS convergence on FP in developing economies like India using the DiD methodology. The study is an original piece of research and is free from plagiarism.
References
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01 Jan 2005
TL;DR: In this paper, the authors investigate whether German companies that have adopted IFRS engage significantly less in earnings management compared to German companies reporting under German generally accepted accounting principles (GAAP), while controlling for other differences in earningsmanagement incentives.
Abstract: Abstract This paper addresses the question whether voluntary adoption of International Financial Reporting Standards (IFRS) is associated with lower earnings management. Ball et al. (Journal of Accounting and Economics, 36(1–3), pp. 235–270, 2003) argue that adopting high quality standards might be a necessary condition for high quality information, but not necessarily a sufficient one. In Germany, a code-law country with low investor protection rights, a relatively large number of companies have chosen to voluntarily adopt IFRS prior to 2005. We investigate whether German companies that have adopted IFRS engage significantly less in earnings management compared to German companies reporting under German generally accepted accounting principles (GAAP), while controlling for other differences in earnings management incentives. Our sample, consisting of German listed companies, contains 636 firm-year observations relating to the period 1999–2001. Our results suggest that IFRS-adopters do not present different earnings management behavior compared to companies reporting under German GAAP. These findings contribute to the current debate on whether high quality standards are sufficient and effective in countries with weak investor protection rights. They indicate that voluntary adopters of IFRS in Germany cannot be associated with lower earnings management.
533 citations
TL;DR: In this paper, the authors investigate whether voluntary adoption of International Financial Reporting Standards (IFRS) is associated with lower earnings management in German listed companies and find that companies that adopt IFRS engage significantly less in earnings management compared to German companies reporting under German generally accepted accounting principles (GAAP).
Abstract: This paper addresses the question whether voluntary adoption of International Financial Reporting Standards (IFRS) is associated with lower earnings management. Ball et al. (Journal of Accounting and Economics, 36(1–3), pp. 235–270, 2003) argue that adopting high quality standards might be a necessary condition for high quality information, but not necessarily a sufficient one. In Germany, a code-law country with low investor protection rights, a relatively large number of companies have chosen to voluntarily adopt IFRS prior to 2005. We investigate whether German companies that have adopted IFRS engage significantly less in earnings management compared to German companies reporting under German generally accepted accounting principles (GAAP), while controlling for other differences in earnings management incentives. Our sample, consisting of German listed companies, contains 636 firm-year observations relating to the period 1999–2001. Our results suggest that IFRS-adopters do not present differe...
467 citations
"Expectation Gap Analysis in Corpora..." refers background in this paper
...Again, voluntary IFRS adoptions have also positive, negative and even insignificant impacts on the EM (Van Tendeloo & Vanstraelen, 2005)....
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TL;DR: In this article, the authors provide evidence on the preliminary effects of mandatory adoption of International Financial Reporting Standards (IFRS) on accounting quality for a relatively broad set of firms from 20 countries that adopted IFRS in 2005 relative to a benchmark group of firms that did not adopt IFRS.
Abstract: We provide evidence on the preliminary effects of mandatory adoption of International Financial Reporting Standards (IFRS) on accounting quality for a relatively broad set of firms from 20 countries that adopted IFRS in 2005 relative to a benchmark group of firms from countries that did not adopt IFRS matched on the strength of legal enforcement, industry, size, book-to-market, and accounting performance. Relative to these benchmark firms, we find that IFRS firms exhibit significant increases in income smoothing and aggressive reporting of accruals, and a significant decrease in timeliness of loss recognition; however we do not find significant differences across IFRS and benchmark firms in meeting or beating earnings targets. Our findings contrast with findings in earlier studies which suggest that IFRS adoption leads to increased accounting quality. Our findings primarily hold for firms in strong enforcement countries, which suggests that enforcement mechanisms in these countries were not able to counter the initial effects of greater flexibility in IFRS relative to domestic GAAP.
455 citations
"Expectation Gap Analysis in Corpora..." refers background in this paper
...The reporting disclosure regulations have been studied in depth, which have concluded that IFRS adoptions have produced enhanced smoothening of income, earnings aggressiveness and timely recognition of losses; increased value relevance; and comparable FS (Ahmed et al., 2013)....
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TL;DR: The need to conduct a literature review is by no means limited to graduate students; scholarly researchers generally carry out literature reviews throughout their research careers as mentioned in this paper, and they can pose challenges even to an experienced researcher.
Abstract: Students entering a graduate program often encounter a new type of assignment that differs from the papers they had to write in high school or as college undergraduates: the literature review (also known as a critical review essay). Put briefly, a literature review summarizes and evaluates a body of writings about a specific topic. The need to conduct such reviews is by no means limited to graduate students; scholarly researchers generally carry out literature reviews throughout their research careers. In a world where the Internet has broadened the range of potentially relevant sources, however, doing a literature review can pose challenges even to an experienced researcher.In drafting this overview, I have incorporated some points made by Paul Pitman in a lecture delivered to students at the Naval Postgraduate School. I have also incorporated some suggestions contained in a handout prepared by John Odell for students in the School of International Relations at the University of Southern California.
327 citations
Additional excerpts
...Further, following the functions of the literature review (Hart, 1998), it has reviewed the relevant thematic issues in the financial reporting practices with a specific focus on IFRS to address the EG, if any....
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Posted Content•
TL;DR: The authors examined the economic consequences of voluntary IFRS adoptions around the world, focusing on the heterogeneity in the consequences, recognizing that firms have considerable discretion in how they adopt IFRS.
Abstract: This paper examines the economic consequences of voluntary IFRS adoptions around the world. In contrast to prior work, we focus on the heterogeneity in the consequences, recognizing that firms have considerable discretion in how they adopt IFRS. Some firms may simply adopt a label, while others view the decision as a serious commitment to transparency. We hypothesize that the economic consequences depend on the extent to which IFRS adoptions represent a serious commitment to transparency. Our results support this prediction. We classify firms into “label” and “serious” adopters and analyze whether capital markets respond to differences in adoption quality, using proxies for market liquidity and the cost of capital. We find that the average effects of voluntary IFRS reporting on these proxies are generally modest, especially when compared to other forms of commitment such as cross-listing in the U.S. However, consistent with our predictions, we find that “serious” adopters experience significantly stronger effects on the cost of capital and market liquidity than label adopters.
307 citations
"Expectation Gap Analysis in Corpora..." refers result in this paper
...Costs of Capital Studies concluded that the voluntary IFRS adoptions have yielded mixed results like significantly reduced capital costs in the USA, Cyprus, the EU countries and Germany (Han & He, 2013), while no evidence could be traced in other countries (Daske et al., 2009)....
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