The effect of IFRS adoption and investor protection on earnings quality around the world
Date of this Version
This study examines the effects of mandatory IFRS adoption and investor protection on the quality of accounting earnings for forty-six countries around the globe. The results suggest that earnings quality increases for mandatory IFRS adoption when a country’s investor protection regime provides stronger protection, at least based on the earnings attribute considered in our study. This study extends the current literature showing that accounting practices are influenced by country level macro settings. The results highlight the importance of investor protection to financial reporting quality and the need for regulators to design mechanisms that will limit managers’ earnings management practices.
This document has been peer reviewed.