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    Rights statement: This is the peer reviewed version of the following article:Bassemir M, Novotny‐Farkas Z. IFRS adoption, reporting incentives and financial reporting quality in private firms. J Bus Fin Acc. 2018;45:759–796. https://doi.org/10.1111/jbfa.12315 which has been published in final form at http://onlinelibrary.wiley.com/doi/10.1111/jbfa.12315/abstract This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.

    Accepted author manuscript, 1016 KB, PDF document

    Embargo ends: 17/04/20

    Available under license: CC BY-NC: Creative Commons Attribution-NonCommercial 4.0 International License

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IFRS Adoption, Reporting Incentives, and Financial Reporting Quality in Private Firms

Research output: Contribution to journalJournal article

Published
<mark>Journal publication date</mark>07/2018
<mark>Journal</mark>Journal of Business Finance and Accounting
Issue number7-8
Volume45
Number of pages38
Pages (from-to)759-796
Publication statusPublished
Early online date26/02/18
Original languageEnglish

Abstract

This study examines financial reporting quality (FRQ) effects around voluntary International Financial Reporting Standards (IFRS) adoptions by German private firms across two important dimensions, earnings quality and disclosure practices. To capture differences in the motivations for IFRS adoptions, we identify four different types of IFRS adopting firms based on a comprehensive set of firm characteristics. We observe earnings quality improvements around IFRS adoptions primarily for one type of firms, which are young, fast growing and seeking access to public equity markets. Using a matched sample of private German GAAP and IFRS reporting firms, we find some evidence suggesting that IFRS also contribute to higher earnings quality. Recognizing that our earnings quality metrics are only incomplete measures of FRQ, we also compare the disclosure practices of IFRS and German GAAP firms. We find that all IFRS firm types disclose significantly more information in their financial reports and show a higher propensity to publish their financial reports voluntarily on the corporate website. Our findings indicate that failure to identify earnings quality changes around IFRS adoption cannot be automatically interpreted as IFRS adoption having no effect on the FRQ of (private) firms. Collectively, our results suggest that both incentives and accounting standards shape private firms’ FRQ.

Bibliographic note

This is the peer reviewed version of the following article:Bassemir M, Novotny‐Farkas Z. IFRS adoption, reporting incentives and financial reporting quality in private firms. J Bus Fin Acc. 2018;45:759–796. https://doi.org/10.1111/jbfa.12315 which has been published in final form at http://onlinelibrary.wiley.com/doi/10.1111/jbfa.12315/abstract This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.