Implementation the International Financial Reporting Standards as a Moderating Variable of the Relationship of Corporate Governance with Earnings Management

Komalasari, Agrianti

doi:10.35808/ersj/708

Cited by 5 publications

(9 citation statements)

References 48 publications

(92 reference statements)

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“…It is possible to observe that only the variable PCI x IFRS presented statistical significance and a negative coefficient in the value of 0.0404, that is, the companies that have an independent administrative committee have a lower index of results management after the adoption of IFRS, thus accepting the second hypothesis of this research. Our results are in line with findings in the literature, Komalasari (2017) analyzed how IFRS impacted the relationship between results management and the presence of an independent committee and verified that this relationship was strengthened after the IFRS were given the following the appointments of IFRS in Germany, Denmark, France and the Netherlands.…”

Section: Model Resultssupporting

confidence: 91%

“…Dummy -1 when there is a committee independent and 0 when not Garrouch et al (2014); Komalasari (2017) Big Four (BIG4) Dummy -1 when audited by a Big Four and 0 when not Komalasari (2017) IFRS Period (IFRS) Dummy -1 for later periods the IFRS and 0 for previous Grecco, Geron, Grecco & Lima (2014) Company Size (TAM) Natural total asset logarithm (TAM = Ln (Total Asset))…”

Section: Study Variables Operationalization and Metrics Referencesmentioning

confidence: 99%

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Earnings management and corporate governance: an analysis based on the adoption of IFRS in Brazil

Prata

Flach

2021

AMBIENTE

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Purpose: This paper aims to analyze whether the adoption of the International Financial Reporting Standards (IFRS) strengthened the negative relationship among earnings management and corporate governance best practices, which are: B3’s differentiated levels of corporate governance, the presence of a board of independent directors and whether the company is audited by a Big Four or not. Methodology: We applied panel data regression with a sample of 92 companies listed in B3 during the period 2002-2007, for the period prior to IFRS and 2010-2015, for the period after IFRS. Data were collected from the explanatory notes, company reference form and in the Economatica® database. In order to measure the dependent variable earnings management, we applied the model proposed by Dechow, Hutton, Kim and Sloan (2012). Results: Results show that when there is an independent administrative committee, the levels of earnings management are lower, and this relationship is driven by the IFRS adoption. We cannot affirm that companies at the highest levels of corporate governance and audited by a Big Four have a lower incidence of earnings management after the application of IFRS. Contributions of the Study: This paper contributes to a better understanding of how variables related to governance can influence the quality of accounting and financial information. It also contributes to the literature that investigates how IFRS can influence the quality of accounting information.

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Section: Model Resultssupporting

confidence: 91%

Section: Study Variables Operationalization and Metrics Referencesmentioning

confidence: 99%

Earnings management and corporate governance: an analysis based on the adoption of IFRS in Brazil

Prata

Flach

2021

AMBIENTE

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“…É possível observar que somente a variável PCI x IFRS apresentou significância estatística e um coeficiente negativo no valor de 0,0404, ou seja, as empresas que tem um comitê administrativo independente possui um menor índice de gerenciamento de resultados após a adoção das IFRS, aceitando assim a segunda hipótese desta pesquisa. Nosso resultado vai de encontro com achados na literatura, Komalasari (2017) analisou como as IFRS impactaram a relação entre gerenciamento de resultados e a presença de um comitê independente e verificou que essa relação foi fortalecida após as adoções das IFRS na Alemanha, Dinamarca, França e Holanda.…”

Section: Resultados Do Modelounclassified

Gerenciamento de resultados e governança corporativa: uma análise a partir da adoção das IFRS no Brasil

Prata

Flach

2021

AMBIENTE

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Objetivo: O artigo tem por objetivo analisar se a adoção das International Financial Reporting Standards (IFRS) fortaleceu a relação negativa entre gerenciamento de resultados e boas práticas de governança corporativa, sendo elas: os níveis diferenciados de governança corporativa da B3, a presença de um conselho de administração independente e se a companhia é auditada por uma Big Four. Metodologia: Utilizou-se uma amostra de 92 empresas listadas na B3 no período de 2002-2007 para anteriormente as IFRS e 2010-2015 para o posteriormente as IFRS, sendo os dados coletados nas notas explicativas, formulário de referência e na base de dados Economática®. Para a mensuração da variável dependente gerenciamento de resultados, foi utilizado o modelo proposto por Dechow, Hutton, Kim e Sloan (2012). Resultados: Os resultados da pesquisa sugerem que quando há a presença de um comitê administrativo independente, os níveis de gerenciamento de resultados são menores, sendo essa relação impulsionada pela adoção das IFRS. Não podemos afirmar que as empresas nos níveis mais altos de governança corporativa e auditadas por uma Big Four possuem menor incidência de gerenciamento de resultados após a aplicação das IFRS. Contribuições do Estudo: O trabalho contribui para um melhor entendimento de como variáveis relacionadas com governança podem sim influenciar na qualidade da informação contábil-financeira. Também contribui para a literatura que investiga se as Normas Internacionais de Contabilidade influenciam ou não a qualidade da informação contábil.

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“…In the context of a theoretical framework, previous research has applied institutional theory to address the implementation/adoption of IFRS (Aburous, 2018;Alon and Dwyer, 2016;Hassan et al, 2014;Pricope, 2015;Vellam, 2012). While considering institutional theory, previous research has empirically established that the moderating role of IFRS adoption influences the positive relationship between ownership structure and audit quality (Komalasari, 2017). Agency theory is a dominant and well-known theory for any corporate organization and its management (Jensen and Meckling, 1976).…”

Section: Literature Review Theoretical Frameworkmentioning

confidence: 99%

“…• Ownership concentration (OC): it is measured by the percentage of the sum of shareholding by five largest shareholders. Moderating variable IFRS is a dummy variable which gives 0 to pre-IFRS adoption period (2013-2015) and 1 to post-IFRS adoption period (2016-2018) in Saudi Arabia; MO and OC (t−1) * IFRS are interaction terms to measure the ownership structures namely (Managerial ownership and ownership concentration) and IFRS adoption, aiming to capture better the moderating role that IFRS adoption could play on the relationship between the ownership structures and audit quality ( Komalasari, 2017).…”

Section: Explanatory Variablesmentioning

confidence: 99%

Moderating Effect of IFRS on Ownership-Structures–Audit-Quality Relationship for Listed Firms in Saudi Arabia

2021

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This research investigates the moderating effect of the IFRS adoption on the link between ownership structures and audit quality for listed non-financial firms in Saudi Arabia .Data were collected from 165 listed non-financial firms in Saudi Arabia over sixyear periods that represent the pre-IFRS adoption period of 2013 to 2015 and post-IFRS adoption period of 2016 to 2018. Managerial ownership and concentrated ownership were interacted with IFRS adoption for discretionary accruals, a proxy of audit quality, factoring in instrumental variables in the constructs. Dynamic panel model estimation utilizing the two-stage generalized moment method (2 SGMM) was used to analyze the data because of its efficacy in mitigating possible endogeneity problems. The study's findings reveal that ownership structure weakens audit quality in the pre IFRS adoption period and that the interaction effect of IFRS with ownership structure leads to high audit quality for listed nonfinancial firms in Saudi Arabia post-IFRS adoption period. The study concludes that firms' convergence with IFRS for reporting purposes provides better audit quality through the instrumentality of ownership structures. The study recommends that, for companies under managerial ownership, the Capital Market Authority of Saudi Arabia should create rules that allow managers to have a maximum defined percentage of ownership stake. If enshrined in the Saudi Arabian corporate governance code of best practices for firms, this will lead to a reduction in the incidence of opportunistic managerial behavior. The findings of this study suggest that the decision of adopting the IFRS carries multiple consequences on ownership structures of firms and should always be considered by regulators in Saudi Arabia and other emerging markets in order to reach a reasonable audit quality level. Emerging markets that have adopted the IFRS like Saudi Arabia, as well as those that are planning to adopt it, should, therefore, consider the potential changes of the right shares of managers and owners as an indication of audit quality level.

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Implementation the International Financial Reporting Standards as a Moderating Variable of the Relationship of Corporate Governance with Earnings Management

Cited by 5 publications

References 48 publications

Earnings management and corporate governance: an analysis based on the adoption of IFRS in Brazil

Earnings management and corporate governance: an analysis based on the adoption of IFRS in Brazil

Gerenciamento de resultados e governança corporativa: uma análise a partir da adoção das IFRS no Brasil

Moderating Effect of IFRS on Ownership-Structures–Audit-Quality Relationship for Listed Firms in Saudi Arabia

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