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https://hdl.handle.net/2440/75989
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Type: | Journal article |
Title: | The impact of mandatory IFRS adoption on accounting quality: evidence from Australia |
Author: | Chua, Y. Cheong, C. Gould, G. |
Citation: | Journal of International Accounting Research, 2012; 11(1):119-146 |
Publisher: | American Accounting Association |
Issue Date: | 2012 |
ISSN: | 1542-6297 1558-8025 |
Statement of Responsibility: | Yi Lin Chua, Chee Seng Cheong and Graeme Gould |
Abstract: | Following the mandatory implementation of International Financial Reporting Standards (IFRS) in Australia as of January 1, 2005, this study examines its impact on accounting quality by focusing on three perspectives: (1) earnings management, (2) timely loss recognition, and (3) value relevance. Using four years of adoption experience since the mandate was first made effective in Australia for a wide range of accounting-based metrics and market-based information, we find that the mandatory adoption of IFRS has resulted in better accounting quality than previously under Australian generally accepted accounting principles (GAAP). In particular, the findings indicate that the pervasiveness of earnings management by way of smoothing has reduced, while the timeliness of loss recognition has improved post-adoption. Additionally, the value relevance of financial statement information has improved, especially for non-financial firms. This is despite the fact that there is evidence to suggest that financial firms are engaged in managing earnings toward a small positive target after the mandatory adoption of IFRS in Australia. |
Keywords: | IFRS accounting quality international accounting Australia |
Rights: | © 2013 American Accounting Association. All rights reserved. |
DOI: | 10.2308/jiar-10212 |
Published version: | http://dx.doi.org/10.2308/jiar-10212 |
Appears in Collections: | Aurora harvest Business School publications |
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