Jurnal Umum
International Accounting Standards and Accounting Quality
We examine whether application of International Accounting Standards
(IAS) is associated with higher accounting quality. The application of IAS
reflects combined effects of features of the financial reporting system, including
standards, their interpretation, enforcement, and litigation. We find
that firms applying IAS from 21 countries generally evidence less earnings
management, more timely loss recognition, and more value relevance of accounting
amounts than do matched sample firms applying non-U.S. domestic
standards. Differences in accounting quality between the two groups of firms
in the period before the IAS firms adopt IAS do not account for the postadoption
differences. Firms applying IAS generally evidence an improvement
in accounting quality between the pre- and postadoption periods. Although
we cannot be sure our findings are attributable to the change in the financial
reporting system rather than to changes in firms’ incentives and the economic
environment, we include research design features to mitigate effects of both.
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