Rights statement: This is an Accepted Manuscript of an article published by Taylor & Francis Group in Accounting and Business Research on 03/08/2015, available online: http://www.tandfonline.com/doi/abs/10.1080/00014788.2015.1044495
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Final published version
Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - The qualitative characteristics of financial information, and managers’ accounting decisions
T2 - evidence from IFRS policy changes
AU - Nobes, Christopher
AU - Stadler, Christian
N1 - This is an Accepted Manuscript of an article published by Taylor & Francis Group in Accounting and Business Research on 03/08/2015, available online: http://www.tandfonline.com/doi/abs/10.1080/00014788.2015.1044495
PY - 2015
Y1 - 2015
N2 - This is the first empirical study that uses publicly available data to provide direct evidence about the role of the qualitative characteristics (QCs) of financial information in managements’ accounting decisions. Based on 40,895 hand-collected IFRS (International Financial Reporting Standards) policy choices on 16 topics made by 514 large firms of 10 jurisdictions in the period 2005–2011, we identify 204 reasons for policy changes. The majority of these refer to QCs from the conceptual framework of the standard-setter, in particular to relevance, faithful representation, comparability and understandability. Firms also frequently refer to transparency, which is not directly mentioned in the framework. Furthermore, we analyse the circumstances under which firms explain their policy changes in terms of improved quality. We hypothesise and find that QCs are more often referred to if the change relates to measurement (i.e. to a more important accounting policy decision). We also find that references to QCs are positively associated both with firm size and with a measure of a jurisdiction's transparency. This complements previous research by providing evidence that managers are, at the least, alert to QCs.
AB - This is the first empirical study that uses publicly available data to provide direct evidence about the role of the qualitative characteristics (QCs) of financial information in managements’ accounting decisions. Based on 40,895 hand-collected IFRS (International Financial Reporting Standards) policy choices on 16 topics made by 514 large firms of 10 jurisdictions in the period 2005–2011, we identify 204 reasons for policy changes. The majority of these refer to QCs from the conceptual framework of the standard-setter, in particular to relevance, faithful representation, comparability and understandability. Firms also frequently refer to transparency, which is not directly mentioned in the framework. Furthermore, we analyse the circumstances under which firms explain their policy changes in terms of improved quality. We hypothesise and find that QCs are more often referred to if the change relates to measurement (i.e. to a more important accounting policy decision). We also find that references to QCs are positively associated both with firm size and with a measure of a jurisdiction's transparency. This complements previous research by providing evidence that managers are, at the least, alert to QCs.
KW - qualitative characteristics
KW - IFRS
KW - relevance
KW - faithful representation
KW - comparability
KW - understandability
KW - transparency
U2 - 10.1080/00014788.2015.1044495
DO - 10.1080/00014788.2015.1044495
M3 - Journal article
VL - 45
SP - 572
EP - 601
JO - Accounting and Business Research
JF - Accounting and Business Research
SN - 0001-4788
IS - 5
ER -