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Jerry Sun, Steven F. Cahan, and David EmanuelAccounting Horizons Vol. 25, No. 4 2011 pp. 837860How Would the Mandatory Adoption of IFRS Affect the Earnings Quality of U.S. Firms? Evidence from Cross-Listed Firms in the U.S.discretionaryaccruals, target beating, earnings persistence, timely loss recognition, and the ERCXLIST = an indicator variable coded 1 for cross-listed firms and 0 for matched U.S. firms;POST = an indicator variable coded 1 for cross-listed firms in post-IFRS periods and 0 in pre-IFRS observations; for matched U.S. firms, POST has the same value as the cross-listedfirm it is matched to;SIZE = size, measured as the log of market value of common equity;GROWTH = growth, measured as the annual percentage change in sales;EISSUE = increase in equity, measured as the annual percentage change in common equity;LEV = leverage, measured as the ratio of total liabilities to common equity;DISSUE = increase in debt, measured as the annual percentage change in total liabilities;TURN = turnover, measured as the ratio of sales to total assets; andCFO = cash flow from operations, measured as cash flow from operations deflated by totalassets.Perusahaan cross listing di US dari negara yang telah mandatory IFRSSebelum dan setelah adopsi IFRS ditentukan berdasarkan akhir tahun fiscal di compustat dan 2008.Jumlah tahun sebelum dan sesudah adalah samaDifference-in-Difference RegressionFor three of these measuresdiscretionaryaccruals, timely loss recognition, and the ERCwe find no difference in the change inearnings quality from the pre- to post-IFRS period for the cross-listed firms and the matched U.S.firms. However, for the other two measuresthe incidence of small positive earnings andearnings persistencewe find evidence that the earnings quality of the cross-listed firmsimproved after they adopted IFRS, and that this improvement is incremental to pre-existingdifferences between the cross-listed and matched firms, and incremental to the change in earningsquality for the matched firms over the identical period.

Wan Adibah Wan Ismail and Khairul Anuar KamarudinTony van ZijlKeitha DunstanAsian Review of AccountingVol. 21 No. 1, 2013pp. 53-73Earnings quality and theadoption of IFRS-basedaccounting standardsEvidence from an emerging marketearnings management and value relevance of earningsand IFRSi, t is a dummy variable given a value of 1 if the financialstatement is prepared under FRS, 0 otherwise; for firm i in year t.SIZEi, t is the natural logarithm of totalassets for firm i in year t, ROAi, t is the return on assets ratio for firm i in year t,LEVERAGEi, t is the total debt divided by total assets for firm i at the end of fiscalyear t, GROWTHi, t is the share price divided by book value per share for firm i at theend of fiscal year t

Thompson One Banker database from 2002 to 2009.We identify each firms financial year end and extract the firms data for the period ofthree years before the adoption of IFRS and three years after the adoption of IFRS.Since the adoption of IFRS is made effective from 1 January 2006, the first annualreport prepared using the new standard is dated 31 December 2006. Thus, we classifyour data based on financial year end of each firm. For example, data from annualreports dated 31 December 2006 to 30 December 2007 are considered to be data for thefirst year of FRS adoption.regression is run separately, for the period before and after theadoption of IFRS. Similar to the value-relevance analysis using the price-earningsregression, the coefficient of E/Pt_1 and the R2 of the model are examined to comparethe ability of earnings to explain stock returns between the two periods.adoption of IFRS-based accounting standards is significantly associated with lowerlevel of earnings management.earnings reported during the IFRS period has greater valuerelevance compared to earnings reported in pre-IFRS periodIFRS-based earnings explain more of the variation in share values.IFRS adoption is associated with higher quality of reported earnings.Specifically, we found that earnings reported during the period after the adoption ofIFRS is associated with lower earnings management. Using both price-earnings andreturn-earnings models, our findings also show that earnings reported during theperiod after IFRS adoption is more value relevant

Muhammad Nurul Houqe & Tony van Zijl

Professor Keitha Dunstan

Dr. Wares KarimWorking paper series Working paper No. 70 January 2010The effect of IFRS Adoption and Investor Protection on Earnings Quality around the WorldDACCRit = discretionary accruals scaled by lagged total assets for firm i in year t

INV = Investor protection measured six ways:

(i) BOIND = board independence (WEF 2008)

(ii) SEC = enforcement of securities laws (WEF 2008)

(iii) MIN = protection of minority shareholders interest (WEF 2008)

(iv) ACC = enforcement of accounting & auditing standards (WEF 2008)

(v) JUD = judicial independence (WEF 2008)

(vi) PRESS = freedom of the press (Kaufman et al. 2007)

Dummy variable takes the value of 1 for a given country in years from mandatory IFRS adoption and 0, otherwise.

SIZEit = natural logarithm of total assets in $ thousands for firm i in year t

LEVit = total long-term debt/ total assets for firm i in year t

GWTHit = sales growth rate, defined as the sales in year t minus sales in year t-1 and scaled by sales in year t-1

CFOit = operating cash flows for firm i in year t scaled by lagged total assets

PPEit = growth rate of PPE, defined as the gross PPE in year t minus gross PPE in year t-1 and scaled by gross PPE in year t-1

LAGLOSSit = dummy variable equals 1 if firm i reports negative income before extraordinary items in year t-1

fixed effects = industry and year fixed effects

OSIRIS database for the period 1998-2007DACCRit = 0 + 1IFRS + 2INV + 3IFRS*INV + 4SIZEit + 5LEVit + 6GWTHit + 7CFOit + 8PPEit + 9LAGLOSSit + fixed effects

(i) IFRS adoption in an environment of weak investor protection does not improve earnings quality; (ii) Increasing the degree of investor protection without adoption of IFRS does not improve earnings quality; and (iii) IFRS adoption improves earnings quality as investor protection is strengthened.

Francois AubertGary GrudnitskiReview of Accounting and FinanceVol. 11 No. 1, 2012pp. 53-72Analysts estimatesWhat they could be telling us about the impactof IFRS on earnings manipulation in Europemanipulated earnings (MEs) componentMEit jReported EPSit 2 ex post convergent consensus EPSitjIFRS dummy takes on avalue of 1 for firm-year observations from the period 2006 to 2008 (the years followingmandatory IFRS adoption), and a value of 0 for observations from the period 1997 to 2003(when local accounting regimes were followed for financial reporting).analyst following (ANALYST), institutional ownership(INSTOWNER), investor protection laws (INVESTPROT), fitted Big X auditor (FBIGX) and a industry dummy classifying a firm as being in a technologyindustry sector (TECH) are regressed against the dependent variable of MEs using the OLS White heteroskedasticity-consistent standard errors andcovariance procedurepubliclytraded firms in 32 European countries applying LG during the period 1997-2003 andadopting IFRS in 2006-2008.MEit a1 a2IFRS a3ANALYSTit a4INSTOWNERit a5INVESTPROTi a6FBIGXit a7TECHit e0itFinancial reporting under IFRS is negatively associated with transitoryearnings manipulation

C. S. Agnes ChengJOURNAL OF INTERNATIONAL ACCOUNTING RESEARCH Vol. 11, No. 1 2012Voluntary IFRS Adoption, Analyst Coverage,and Information Quality: InternationalEvidenceThey adopt a Heckman two-stage regression procedure. In the first stage, they run a probitmodel on factors that affect a firms decision to adopt IFRS (Equation (3)). They then include thedummy variable for IFRS adoption (DIFRS) in the second stage regression. They also include theinverse Mills ratio (Lambda) from Equation (3) to control for self-selection bias. In the secondstage, they test the association between IFRS adoption and analyst coverage (ANA, Equation (4))and analyst total information set (RK, Equation (5)), respectively. ANA is measured as the naturallog of one plus the number of analysts providing an EPS forecast for a firm, and RK is measured asa within-year fractional rank of precision of total information K (K h s where h is precision ofpublic information and s is precision of private information, as suggested by Barron et al. 1998).For the first stage analysis, they include year, industry, and country fixed effect. For the secondstage analysis, they only include year and industry effect and exclude the country fixed effectbecause country-level control variables such as Law, SecReg, and GDP are already included. Forrobustness, they include country effects for some analyses. They use weighted least squares (i.e.,assign an equal weight to each sample country) to control for the potential problems caused by theunequal distribution of sample firms across different countries. They also use standard errorsadjusted for firm-level clustering to address potential concerns over serial correlation problemsassociated with unbalanced panel data.international sample from Worldscope and I/B/E/S International.When certain financial statement data are missing in Worldscope, they extract data from GlobalVantage. The sample has a total of 17,227 observations with 1,076 IFRS adopters and 16,151 non-adopters from 29 countries over the period 19982004DIFRS_ b0 b1Size b2Lev b3Growth b4ForSale b5Cross YearDummies IndustryDummies CountryDummies errorterm: 3ANA a0 a1DIFRS a2Size a3Accr a4EVar a5StdROE a6ROA a7NegEarn a8Big4 a9USGAAP a10Law a11SecReg a12GDP a13Lambda YearDummies IndustryDummies errorterm:4RK q0 q1DIFRS q2ANA q3Size q4Accr q5EVar q6NegEarn q7ROA q8Big4 q9USGAAP q10Law q11SecReg q12GDP q13Lambda YearDummies IndustryDummies errorterm:(1) voluntary IFRS adoption increases analyst coverage, suggesting thatIFRS adopters attract more analysts than non-adopters; and (2) voluntary IFRS adoption improvesthe precision of analysts total information set incorporated into earnings forecasts.

Mascia Ferrari1, Francesco Momente2, and Francesco Reggiani2Journal of Accounting,Auditing & Finance27(4) 527556. 2012Investor Perception of theInternational AccountingStandards Quality: InferencesFrom GermanyThe level of earnings management for the IAS-reporting firms is lowerthan for the HGB-reporting firms.After controlling for the discretionary accrual differences between theIAS and HGB adopters, investors perceive an incremental information benefit anda lower uncertainty for accounting numbers under the IAS regime.German companies, excluding financials and utilities,listed on the Frankfurt Stock Exchange. The sample period covers the years 2000 to 2004, butdue to model constructions, we require that cash flow data be available from 1999 to 2005.Overall, the evidence based on the DechowDichev model is mixed; we can assert that,with the exception of the technology industry, IAS firms exhibit a degree of earnings managementequal to or lower than the HGB adopters, but there is a clear evidence of a betterearnings quality for IAS adopters only in the health care industry.The analyses based on the MJ model indicate that IAS adopters exhibit a lower degreeof earnings management with respect to the HGB adopters, with the exception of the consumerservice industry, for which we are not able to detect any significant differencebetween IAS and HGB, and the technology industry (whose results could be biased by thelower number of observations).In summary, the first set of analyses supports the idea that the IAS adopters are generallycharacterized by a level of earnings management lower than or equal to the HGB adopters.investors consider the accounting numbers of the IAS firms more reliableand of higher quality, but these benefits decreases with size.

Australian Accounting Review No. 55 Vol. 20 Issue 4 2010Md Humayun Kabir, Fawzi Laswad & Md Ainul IslamImpact of IFRS in New Zealand on Accounts and Earnings QualityAccruals qualityPredictive ability of earningsABSDACC is absolute value of residuals from model (1); SIGNEDDACC is signed residuals from model (1); DIFRS is a dummy variable that takes 1 if financial statements are prepared using IFRS and 0otherwise; LOGTA is natural log of total assets; TL/TA is total liabilities deflated by total assets; ABSTACC/TA is absolute total accruals deflated by total assets; CFO/TA is cash flows from operatingactivities deflated by total assets; DBIG4 is a dummy variable that takes 1 if the auditor is a Big 4 auditor and 0 otherwise.The sample selection startedwith firms listed on theNewZealand Stock Exchange (NZX) and we collected datafor 200209 from NZX Deep Archive.The impact of the adoption of International FinancialReporting Standards (IFRS) on the accounts and thequality of earnings of New Zealand firms is examined.Our analysis of IFRS adjustments for the last periodunder pre-IFRS NZ Generally Accepted AccountingPrinciples (GAAP) reveals that total assets, total liabilitiesand net profit were significantly higher under IFRS thanunder pre-IFRS GAAP. Profit and equity under IFRS wereincreased by adjustments for goodwill and otherintangibles and investment property, and decreased byadjustments for employee benefits and share-basedpayments. Using data for 20022009, we find thatabsolute discretionary accruals were significantly higherunder IFRS than under pre-IFRS NZ GAAP, suggestinglower earnings quality under IFRS than under pre-IFRSNZ GAAP. However, we find no significant differences insigned discretionary accruals and the ability of earnings topredict one-year-ahead cash flows between pre-IFRS NZGAAP and IFRS. These results are consistent acrossalternative measures of accruals quality, sample selectionand whether firms elected to adopt IFRS in 2005 ratherthan comply with them in 2007.

Stephen Lin* William Riccardi Changjiang (John) Wang Florida International University January 2012Does Accounting Quality Change Following a Switch from U.S. GAAP to IFRS? Evidence from GermanyEarnings ManagementTimely Loss RecognitionValue RelevanceA number of firms (95% of these firms are in hi-tech industries) in Germany applied U.S. GAAP and were required to switch to IFRS in 2005Using a sample of German high-tech firms that transitioned to IFRS from U.S. GAAP in 2005 (switching firms), we find that accounting numbers under IFRS generally exhibit more earnings management, less timely loss recognition, and less value relevance compared to those under U.S. GAAP. In addition, after analyzing the accounting quality of firms that applied IFRS throughout the entire sample period, we find that, for the metrics suggesting a decline in accounting quality for both groups of firms, the change is significantly more pronounced for firms switching to IFRS from U.S. GAAP. Overall, our findings indicate that the application of U.S. GAAP generally resulted in higher accounting quality than application of IFRS, and a transition from U.S. GAAP to IFRS reduced accounting quality.

Dechow, P., W. Ge, and C. Schrand. 2010. Understanding earnings quality: A review of the proxies, theirdeterminants and consequences. Journal of Accounting and Economics 50: 344401.

Beberapa penelitian telah dilakukan untuk meneliti pengaruh standar akuntansi, terutama dengan diadopsinya IFRS (baik secara sukarela maupun diwajibkan) terhadap kinerja keuangan perusahaan. Barth et al. (2008) meneliti kualitas akuntansi sebelum dan sesudah dikenalkannya IFRS dengan menggunakan sampel sebanyak 327 perusahaan di 21 negara yang telah mengadopsi IAS secara sukarela antara tahun 1994 dan 2003. Dalam penelitian ini ditemukan bukti bahwa setelah diperkenalkannya IFRS, tingkat manajemen laba menjadi lebih rendah, relevansi nilai menjadi lebih tinggi, dan pengakuan kerugian menjadi semakin tepat waktu, dibandingkan dengan masa sebelum transisi di mana akuntansi masih berdasarkan local GAAP. Morais dan Curto (2008) meneliti apakah pengadopsian IFRS di Portugal berdampak terhadap meningkatnya kualitas laba dan relevansi nilai dari data akuntansi dari 34 perusahaan Portugal yang terdaftar di bursa sebelum pengadopsian IFRS (tahun 1995-2004) dan setelah pengadopsian IFRS (tahun 2004-2005). Mereka menemukan bahwa selama periode ketika perusahaan mengadopsi IFRS, perusahaan lebih sedikit melakukan earning smoothing. Iatridis dan Rouvolis (2010) meneliti dampak transisi dari Greek GAAP dan IFRS terhadap laporan keuangan perusahaan-perusahaan di Yunani yang terdaftar di bursa. Penelitian ini menemukan bahwa meskipun dampak pengadopsian IFRS pada tahun pertama pengadopsian kurang baik, yang mungkin diakibatkan biaya transisi ke IFRS, namun kualitas laporan keuangan perusahaan mengalami peningkatan yang signifikan pada periode-periode selanjutnya. Van Tendeloo dan Vanstraelen (2005) meneliti apakah pengadopsian IFRS secara sukarela ada hubungannya dengan manajemen laba yang lebih rendah. Penelitian dilakukan terhadap perusahaan-perusahaan di Jerman dari tahun 1999 sampai 2001. Penelitian tersebut menemukan bahwa perusahaan yang mengadopsi IFRS secara sukarela memiliki discretionary 12 accrual yang lebih tinggi dan hubungan negatif antara akrual dan arus kas operasi yang lebih rendah dibandingkan perusahaan yang membuat laporan dengan menggunakan German GAAP. Jeanjean dan Stolowy (2008) meneliti dampak keharusan mengadopsi IFRS terhadap manajemen laba dengan mengobservasi 1146 perusahaan dari Australia, Prancis, dan UK mulai tahun 2005 hingga 2006. Mereka menemukan bahwa manajemen laba di negara-negara tersebut tidak mengalami penurunan setelah adanya keharusan mengadopsi IFRS, dan bahkan meningkat untuk Prancis. Lin dan Paananen (2007) meneliti karakteristik akuntansi perusahaan-perusahaan di Jerman yang membuat pelaporan keuangan berdasarkan IAS selama tahun 2000-2002 (periode IAS) serta IFRS selama tahun 2003-2004 (periode IFRS secara sukarela) dan 2005-2006 (periode IFRS sebagai keharusan). Dalam penelitian ini ditemukan bukti bahwa terjadi penurunan kualitas akuntansi setelah adanya keharusan pengadopsian IFRS pada tahun 2005 dan mengindikasikan tidak ada peningkatan pada kualitas akuntansi, bahkan dapat dikatakan kualitas akuntansi memburuk dari waktu ke waktu. Chen et al. (2010) meneliti pengaruh IFRS terhadap kualitas akuntansi di negara-negara Uni Eropa. Mereka membandingkan kualitas akuntansi dari perusahaan-perusahaan yang terdaftar di bursa di 15 negara anggota Uni Eropa sebelum dan setelah dilakukannya pengadopsian IFRS secara penuh pada tahun 2005. Penelitian ini menggunakan lima indikator sebagai proxy bagi kualitas akuntansi, dan menemukan bahwa terjadi peningkatan pada sebagian besar indikator tersebut setelah pengadopsian IFRS di Uni Eropa. Hal ini ditunjukkan dengan lebih sedikitnya pengaturan laba dengan target tertentu, absolute discretionary accrual yang jauh lebih rendah, dan kualitas akrual yang lebih tinggi. Namun, penelitian ini juga menemukan 13 bahwa perusahaan lebih banyak melakukan earning smoothing dan lebih tidak tepat waktu dalam mengakui kerugian yang nilainya besar pada periode setelah IFRS. Barth et al. (2008) find that firms exhibit higher accounting quality after voluntarily switching to IFRS based on a variety of metrics. Barth, M. E., W. R. Landsman, and Lang, M.H. (2008). "International accounting standards and accounting quality." Journal of Accounting Research 46(3): 467-498.IAS adoption should improve the financial reporting quality (Barthet al., 2008; Daske, Hail, Leuz, & Verdi, 2008) and that an increase in accounting qualityshould be relevant to investors by reducing information asymmetries and the cost of capital,and increasing liquidity (Daske et al., 2008; Diamond & Verrecchia, 1991; Kim &Verrecchia, 1994).dapus ferrari et. al 2012

There are also a number of papers that examine differences in accounting quality between U.S. GAAP and IFRS in environments where firms are free to choose between multiple sets of standards. For example, Bartov et al. (2005) find no significant difference in earnings quality, measured by the price-earnings relationship, for a sample of German New Market firms that were allowed to choose between IFRS and U.S. GAAP. Similarly, the findings of Van der Muelen et al. (2007) suggest that there is no difference in value relevance between application of IFRS and U.S. GAAP using a similar sample of German firms, though they do find that 5 reconciling firms may attempt application of U.S. GAAP results in more predictable earnings than application of IFRS. These two studies provide consistent evidence suggesting that investors do not perceive accounting numbers reported under U.S. GAAP compared to those reported under IFRS to provide materially different information. This is consistent with Leuz (2003), which finds that market liquidity and information asymmetry are similar across IFRS and U.S. GAAP firms. Bartov, S.R. Goldberg and M. Kim (2005). "Comparative value relevance among German, US and International Accounting Standards: A German stock market perspective." Journal of Accounting, Auditing & Finance 20(2): 95-119. Van der Meulen, S., Gaeremynck, A., and Willekens, A. (2007). "Attribute differences between U.S. GAAP and IFRS earnings: An exploratory study." The International Journal of Accounting(42): 123-142. Leuz, C. (2003). "IAS versus US GAAP: Information asymmetry-based evidence from Germany's new market." Journal of Accounting Research 41(3): 445-472.Most up-to-date empirical evidence supports the positive relation between greater disclosureand analysts coverage (e.g., Lang and Lundholm 1996; Healy et al. 1999; Hope 2003; Lang et al.2003) for both U.S. and international samples. Cari penelitian terbaru yang mendukung positif relationship IFRS dan kualitas laba

There are different streams of IFRS literature.5 Onestream investigates the impact of IFRS adoption onearnings quality and finds that IFRS adoption impactson this inmany ways. For example, Cuijpers and Buijink(2005) find that voluntary adopters of IFRS and USGAAP have higher analyst following, higher analystearnings forecast error, abnormal stock return volatilityand higher cost of equity capital. Gassen and Sellhorn(2006) find significant differences between voluntaryadopters of IFRS and German GAAP firms: IFRSfirms have more persistent, less predictable and moreconditionally conservative earnings. Barth, Landsmanand Lang (2008) compare earnings management of firms from 21 countries that voluntarily switched fromdomestic accounting standards to IFRS with firms thatuse domestic accounting standards. They find that afterIFRS adoption, firms have higher variance of changesin net income, a higher ratio of variance of changesin net income to variance of changes in cash flows,higher correlation between accruals and cash flows,lower frequency of small positivenet incomes, andhigherfrequency of large losses. They also find greater valuerelevance for IFRS earnings. In contrast, Van Tendelooand Vanstraelen (2005) find that IFRS firms have morediscretionary accruals and a lower correlation betweenaccruals and cash flows.Another stream of research examines the valuerelevance of IFRS in comparison with local GAAP.Hung and Subramanyam (2007) compare the valuerelevance of IFRS and German GAAP by regressingstock prices on book values and net incomes, and findbook values of equity have a higher coefficient underIFRS and net incomes have a higher coefficient underGerman GAAP. In contrast, by regressing market returnon earnings, Bartov, Goldberg and Kim (2005) find ahigher coefficient on IFRS and US GAAP earnings thanGerman GAAP earnings. Armstrong, Barth, Jagolinzerand Riedl (2007) identify 16 events between 2002 and2005 regarding the likelihood of adoption of IFRS inthe EU and find positive (negative) investor reaction toevents that increased (decreased) the likelihood of IFRSadoption in Europe. Morais and Curto (2009) find thatvalue relevance of financial information disclosed byEuropean-listed companies increased after mandatoryapplication of IFRS. On the other hand, Clarkson et al.(2009) investigate the impact of IFRS adoption in 14European countries and Australia on the value relevanceof earnings and book value, and find that value relevanceof IFRS and local GAAP numbers remained similar.However, their linear pricing model suggests a decreasein value relevance for firms in Common Law countries,while the value relevance for firms inCodeLawcountriesis unchanged. Goodwin et al. (2008) find no evidencethat IFRS earnings and book value are more valuerelevant than AustralianGAAP earnings and book value.A third stream of research examines the impact ofIFRS adoption on cost of capital. For example, Leuz andVerrecchia (2000) find that voluntary adopters of IFRS orUS GAAP have lower bidask spreads and higher stockturnover ratios, although the difference between IFRSand US GAAP is not statistically significant. In contrast,Daske (2006) finds no change in cost of equity capital forGerman firms voluntarily adopting IFRS or US GAAP. Dapus kabir 2010