The Impact of IFRS Adoption on Earnings Management Activities and Value Relevance of Accounting Information: Applied Study

تأثير تطبيق المعايير الدولية للتقارير المالية على ممارسات إدارة الأرباح والقيمة الملائمة للمعلومات المحاسبية: دراسة تطبيقية

  • Mohamed Ibrahim Mohamed Hessian Faculty if Commerce , Ain shams University
Keywords: Adoption of International Financial Reporting Standards, Quality of Accounting Information, Earnings Management, Earnings Smoothness, Discretionary Accruals, Value Relevance of Accounting Information

Abstract

This study focused on the economic benefits of adoption of IFRS. More specifically, this study emphasis on whether the quality of the accounting information has been improved after the adoption of IFRS. The study investigated quality of accounting information through two main variables: earnings management and the value relevance of accounting information. The study was applied on 56 Egyptian listed companies during the period from 1997 to 2011, which divided into two periods: the period after the adoption of the standards from 2007 to 2011, and before the adoption of the International Financial Reporting Standards from 1997 to 2006. The research concluded that there is a significant impact of the adoption of IFRS on managerial opportunities to manage earnings using discretionary accruals, which is reflected in the lower value relevance of accounting information. Study results also indicate that companies with high leverage are the lowest companies in the value relevance of accounting information, and that companies that are subject to private sector law No. 159 of 1981 are the most companies engaged in earnings management activities through discretionary accruals, large size companies, without any significant impact on future growth opportunities and listing on global exchanges.

Author Biography

Mohamed Ibrahim Mohamed Hessian, Faculty if Commerce , Ain shams University

Mohamed Hessian is an Assistant Lecturer in the Faculty of Commerce at Ain Shams University, Certified Management Accountant, and Postdoctoral Fellows in Glasgow Caledonian University, UK. His research interests include Financial Reporting Quality, Earnings Management, Corporate Governance and Accounting Conservatism.

Published
2018-08-28
Section
Articles