ISSN: 2344 - 102X
ISSN-L: 2344 - 102X
Our journal is currently indexed in the following databases:
|
|
Article from Volume 2, Number 3, Year 2014MEASUREMENT OF FINANCIAL REPORTING QUALITY BASED ON IFRS CONCEPTUAL FRAMEWORK'S FUNDAMENTAL QUALITATIVE CHARACTERISTICS | Download | Author(s): Alexios Kythreotis | DOI: 10.4316/EJAFB.2014.231 | | Abstract: The IASB creates the standards and the conceptual framework in an attempt to create higher quality financial statements. Through this article, the extent to which this objective has been achieved is examined. An important characteristic of this research is the fact that the quality of financial statements is examined in light of the Conceptual Framework. Specifically, the two fundamental qualitative characteristics - relevance and faithful representation (reliability) - set by the IAS Committee through the Conceptual Framework are examined. Additionally, this article highlights the conflict between the existing methods for measuring reliability and the faithful representation, as defined by the Conceptual Framework. The degree of relevance and reliability is measured by the usage of four alternative regression models. The sample of this research consists of listed companies of fifteen European countries that have adopted IFRS mandatorily and the time horizon that is investigated is 10 years, from 2000 until 2009. Specifically, the period between 2000 and 2004 is defined as the period before the adoption, while the period between 2005 and 2009 is defined as the period after the adoption. Generally, the findings that are obtained support an increase in relevance, while the reliability seems to be unchanged. | Keywords: Adoption Of IFRS; Financial Reporting Quality; Conceptual Framework; Qualitative Characteristics; Relevance; Faithfull Representation (Reliability). | References: 1. Anwer S. A., Neel, M. And Wang, D. 2013. Does Mandatory Adoption Of IFRS Improve Accounting Quality? Preliminary Evidence. Contemporary Accounting Research. Vol. 30, Issue 4, Pp. 1344–1372.
2. Ball, R., Kothari, S.P. And Robin, A. 2000. The Effect Of International Institutional Factors On Properties Of Accounting Earnings. Journal Of Accounting And Economics, 29(1). Pp. 1-51.
3. Ball, R., And L. Shivakumar. 2005. Earnings Quality In UK Private Firms: Comparative Loss Recognition Timeliness. Journal Of Accounting & Economics 39 (1): 83-128.
4. Ball, R., Brown, P. 1968. An Empirical Evaluation Of Accounting Income Numbers. Journal Of Accounting Research 6, 159-178.
5. Bandyopadhyay, S., Chen, C., Huang, A. And Jha, R., 2010. Accounting Conservatism And The Temporal Trends In Current Earnings’ Ability To Predict Future Cash Flows Versus Future Earnings: Evidence On The Trade-Off Between Relevance And Reliability. Contemporary Accounting Research, Volume 27, Issue 2, Pages 413–460.
6. Barth, M., W. Landsman, And M. Lang. 2008.International Accounting Standards And Accounting Quality. Journal Of Accounting Research 46 (3): 467-498.
7. Bartov, E., Goldberg, S. And Kim, M. 2005. Comparative Value Relevance Among German, U.S., And International Accounting Standards: A German Stock Market Perspective, Journal Of Accounting, Auditing And Finance, 20(2), Pp. 95-119.
8. Brown, S., Lo, K. And Lys T. 1999. Use Of R2 In Accounting Research: Measuring Changes In Value Relevance Over The Last Four Decades. Journal Of Accounting And Economics. 28(2): 83-115.
9. Capkun, V., Cazavan-Jeny, A., Jean, T. And Weiss, L. 2008. Earnings Management And Value Relevance During The Mandatory Transition From Local GAAPs To IFRS In Europe. Working Paper. Available At: Http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1125716 Assessed: 11/02/2014.
10. Chalmers, K., Clinch, G. And Godfrey, J. Changes In The Value Relevance Of Financial Information Upon IFRS Adoption. Paper Presented At American Accounting Association 2009 Annual Meeting. Available At: Http://aaahq.org/AM2009/abstract.cfm?submissionID=2168 Assessed: 11/02/2014.
11. Chen, H., Q. Tang, Qingliang, Y. Jiang And Z. Lin. 2010. The Role Of International Financial Reporting Standards In Accounting Quality: Evidence From The European Union. Journal Of International Financial Management & Accounting. Autumn, Volume 21, Issue 3, Pp. 220–278.
12. Christensen, H., Lee, E. And Walker M. 2009. Do IFRS Reconciliations Convey Information? The Effect Of Debt Contracting. Journal Of Accounting Research, Vol. 47, Issue 5, Pp.1167–1199.
13. Collins, D., Pincus, M. And Xie, H. 1999. Equity Valuation And Negative Earnings: The Role Of Book Value Of Equity. The Accounting Review. 74(1): 29-61.
14. Collins, D., Maydew, E., Weiss, I., 1997. Changes In The Value-relevance Of Earnings And Book Values Over The Past Forty Years. Journal Of Accounting And Economics 24, 39–67.
15. Cotter, J. And Richardson, S. 2002. Reliability Of Asset Revaluations: The Impact Of Appraiser Independence. Review Of Accounting Studies. Volume 7, Number 4, 435-457.
16. Cramer, J. 1987. Mean And Variance Of R2 In Small And Moderate Samples. Journal Of Econometrics 35: 253-266.
17. De Angelo, L. 1986. Accounting Numbers As Market Valuation Substitutes: A Study Of Management Buyouts Of Public Stockholders. The Accounting Review 61 (3): 400-420.
18. Dechow, P. And Sloan, R. 1991. Executive Incentives And The Horizon Problem: An Empirical Investigation. Journal Of Accounting And Economics, 14, 1991, 51-89.
19. Dechow, P., And Dichev, I., 2002. The Quality Of Accruals And Earnings: The Role Of Accrual Estimation Errors. The Accounting Review 77 (Supplement): 35–59.
20. Dechow, P., R. Sloan, And A. Sweeney. 1995. Detecting Earnings Management. The Accounting Review 70 (2): 193-225.
21. Francis, J., Schipper, K., 1999. Have Financial Statements Lost Their Relevance? Journal Of Accounting Research 37, 319-352.
22. FTSE Country Classification Sep. 2009. Available At: Http://www.ftse.com
23. Healy, P. 1985. The Effect Of Bonus Schemes On Accounting Decisions. Journal Of Accounting And Economics 7: 85–107.
24. Horton, J. And Serafeim, G. 2007a. “Value Relevance Of The International Financial Reporting Standards (IFRS): Investigations Of The Transitional Documents For UK, Spanish, French And Italian Companies”, Pp. 202-222, Cited In Report For The European Commission On The First Year Of Implementation Across The EU Of International Financial Reporting Standards (IFRS) And The Fair Value Directive, ICAEW, London. Available At: Http://ec.europa.eu/dgs/internal_market/docs/evaluation/2007- Eu_implementation_of_ifrs.pdf Assessed: 11/02/2014
25. Horton, J. And Serafeim, G. 2010. Market Reaction To And Valuation Of IFRS Reconciliation Adjustments: First Evidence From The UK. Review Of Accounting Studies Vol. 15, No. 4. Pp. 725-751.
26. Hung, M. And Subramanyam, K.R. 2007. Financial Statement Effects Of Adopting International Accounting Standards: The Case Of Germany, Review Of Accounting Studies, Volume 12, Issue 4, 623-657.
27. Jermakowicz, E., Prather-Kinsey, J. And Wulf, I. 2007. The Value Relevance Of Accounting Income Reported By DAX-30 German Companies. Journal Of International Financial Management And Accounting. Volume 18, No. 3. Vol. 18, Issue 3, Pp. 151–191.
28. Jones, J. 1991. Earnings Management During Import Relief Investigations. Journal Of Accounting Research 29: 193–228.
29. Kim, M., Kross, W. 2005. The Ability Of Earnings To Predict Future Operating Cash Flows Has Been Increasing - Not Decreasing. Journal Of Accounting Research 43, 753-780.
30. Kirschenheiter, M. 1997. Information Quality And Correlated Signals. Journal Of Accounting Research 35 (1): 43–59. 31. Lanito, A. 2007. Does Ifrs Improve The Usefulness Of Accounting Information In A CodeLaw Country? Working Paper. Available At: Http://papers.ssrn.com/sol3/papers.cfm?abstract_id=905218, Assessed: 10/04/2014.
32. McNichols, M., 2002. Discussion Of ‘The Quality Of Accruals And Earnings: The Role Of Accruals Estimation Errors.’ The Accounting Review 77 (Supplement): 61-69.
33. Richardson, S., R. Sloan, M. Soliman, And I. Tuna. 2005. Accrual Reliability, Earnings Persistence, And Stock Prices. Journal Of Accounting And Economics 39: 437-485.
34. Riedl, E., (2010). Discussion Of “Accounting Conservatism And The Temporal Trends In Current Earnings' Ability To Predict Future Cash Flows Versus Future Earnings: Evidence On The Trade-off Between Relevance And Reliability.” Contemporary Accounting Research, 27(2), 461-467.
35. Van Der Meulen, S., Gaeremynck. A. And Willekens M. 2007. Attribute Differences Between U.S. GAAP And IFRS Earnings: An Exploratory Study. The International Journal Of Accounting. Volume 42, Issue 2, Pp. 123-142.
36. Van Tendeloo, B. And Vanstraelen, A. 2005. Earnings Management Under German GAAP Versus IFRS, European Accounting Review, 14(1), Pp. 155-80.
37. Wang, X., Young, G. And Zhuang, Z. 2008. The Effects Of Mandatory Adoption Of International Financial Reporting Standards On Information Environments. Working Paper. Presented At American Accounting Association. Available At: Http://aaahq.org/AM2008/abstract.cfm?submissionID=1623, Assessed: 10/05/2014.
38. White, H. 1980. A Heteroscedasticity Consistent Covariance Matrix Estimator And A Direct Test For Heteroscedasticity. Econometrica. 48, 817-838.
39. White, H. 2007. Assessing Accrual Reliability In Periods Of Suspected Opportunism. Working Paper. |  
| Back to journal ... |
|
|
|
|
|
|