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.
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TL;DR: In this paper, the impact of early adoption of IFRS 15 by real estate companies (REC) on accounting information disclosed is analyzed, and the results show that the application of the five-step model for revenue recognition is expected to result in a material effect on accounting numbers.
Abstract: The International Accounting Standards Board (IASB) has published in 2014 a new standard, IFRS 15 “Revenue from Contracts with Customers”. It replaces IAS 18 “Revenue” and IAS 11 “Construction Contracts” in order to provide a single comprehensive model of accounting for revenue. Entities are required to adopt IFRS 15 for periods beginning on or after January 2018 with early adoption allowed. The objective of this paper is to analyze the impact of the early adoption of IFRS 15 by Real Estate Companies (REC) on accounting information disclosed. The study is covering REC listed in Dubai Financial Market (DFM) using IFRS 15 to prepare their consolidated financial statements in 2015. The application of the five-step model for revenue recognition is expected to result in a material effect on accounting numbers. Results indicate that early adoption of IFRS 15 by REC has a significant positive affect on earnings and stockholders’ equity for all firms analyzed in the paper. The standard has a double favorable effect: revenue is recognized over time in almost all contracts with customers and contract costs are more likely capitalized rather than expensed. Moreover, results show that all the early adopters have selected the modified retrospective approach in order to disclose related information. This research indicates that the application of IFRS 15 by REC in Dubai has resulted in an increase in the measurement of financial indicators: earnings and stockholders’ equity.
9 citations
TL;DR: In this article, a dynamic measure of the accounting enforcement system capturing controls at two levels is proposed, namely the auditing activity and the controls performed by national enforcers, and an illustrative empirical analysis is carried out on the German and the Italian contexts to show the potential of the index for enforcement studies.
Abstract: It is widely acknowledged that an effective enforcement system represents a crucial element to achieve significant improvements in financial reporting through the adoption of high-quality accounting standards. Indeed, the quality of financial reporting is considerably influenced not only by the standards to be adopted but also by their actual implementation, and consequently by enforcement mechanisms. The topic has generated considerable interest among scholars, who devoted their attention to developing different measures of the quality of the enforcement system. Building upon this literature, this paper aims at exploring the accounting enforcement system and focuses on controls over financial reporting considering two levels, namely the auditing activity and the controls performed by national enforcers. This paper extends the prior literature by proposing a dynamic measure of the accounting enforcement system capturing controls at those two levels. More specifically, the index here proposed focuses on the quality of the accounting enforcement operated by national enforcers in terms of proactivity, intended as the national enforcers’ capability to detect problems not highlighted in the auditors’ opinions, thus shifting the focus from an input to an output perspective. Indeed, the activities of auditors and national enforcers are strictly connected, given that the auditors’ opinion is the first public output of accounting controls and that is normally one of the bases for further investigation by national enforcers. An illustrative empirical analysis is carried out on the German and the Italian contexts to show the potential of the index for enforcement studies.
8 citations
"Expectation Gap Analysis in Corpora..." refers background in this paper
...Documented literature reveals that mandatorily adopted IFRS have improved the AQ in most countries (Quagli et al., 2018), differing with few studies, while others have concluded without any such precedence....
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TL;DR: This paper examined the impact of the adoption of the International Financial Reporting Standards (IFRS) on management accounting in Japanese manufacturing companies and found that there seem to be considerable differences in the importance of strategy goals and financial and non-financial measures before and after IFRS adoption.
Abstract: The International Financial Reporting Standards (IFRS) are becoming the leading principles and a special driver for the convergence of financial and management accounting in over 130 countries including the voluntary adoption. The purpose of this study is to examine the impact of the adoption of IFRS on management accounting. More specifically, this study investigates the differences in the importance of strategy goals, and financial and nonfinancial measures that have changed after its adoption. The results of a questionnaire survey conducted on Japanese manufacturing companies indicate that the effects of respondent firms provide with management accounting practices and techniques before and after the adoption of IFRS. My findings suggest that there seem to be considerable differences in the importance of strategy goals, and financial and nonfinancial measures before and after IFRS adoption.
6 citations
"Expectation Gap Analysis in Corpora..." refers background in this paper
...Reporting Practices (Accounting Disclosures) Literature indicates that more than 130 countries so far have been either adopted or converged with IFRS (Hoshino, 2017) and IFRS-based audited FS have been heavily relied on for attracting foreign capital and for enhanced disclosure practices....
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