University of Hertfordshire

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The Effect of Financial Systems on Earnings Management Among Firms Reporting Under IFRS. / Paananen, M.

University of Hertfordshire, 2006. (Business School Working Papers; Vol. UHBS 2006-2).

Research output: Working paper

Harvard

Paananen, M 2006 'The Effect of Financial Systems on Earnings Management Among Firms Reporting Under IFRS' Business School Working Papers, vol. UHBS 2006-2, University of Hertfordshire.

APA

Paananen, M. (2006). The Effect of Financial Systems on Earnings Management Among Firms Reporting Under IFRS. (Business School Working Papers; Vol. UHBS 2006-2). University of Hertfordshire.

Vancouver

Paananen M. The Effect of Financial Systems on Earnings Management Among Firms Reporting Under IFRS. University of Hertfordshire. 2006. (Business School Working Papers).

Author

Paananen, M. / The Effect of Financial Systems on Earnings Management Among Firms Reporting Under IFRS. University of Hertfordshire, 2006. (Business School Working Papers).

Bibtex

@techreport{1b888707fdf54e0e9e4fe7f6cd5c30c3,
title = "The Effect of Financial Systems on Earnings Management Among Firms Reporting Under IFRS",
abstract = "This study examines the relation between financing system and earnings management and changes in the patterns of earnings management activities over time. Prior research suggests that managers are more likely to manage earnings in a credit financing system because the purpose of the financial reporting in this credit environment is to protect creditors by prudently calculating distributable profit. In addition, multinational enterprises financial reporting tends to be anchored in their home countrys practices and responsive to their national requirements. Using 121 firm-year observations of non-U.S. firms reporting under IFRS, we find some evidence that firms from credit financing systems manage earnings more than firms from equity financing systems. We find that firms in a credit financing environment report 1.6% higher in absolute discretionary accruals than equity firms. However, we did not find evidence that overall earnings management activities have decreased as the IASBs Comparability/Improvements Project went into effect after 1995. This finding suggests that the IASB has not been effective in narrowing down the international differences in accounting practices and providing comparable financial statements to the public.",
author = "M. Paananen",
year = "2006",
language = "English",
series = "Business School Working Papers",
publisher = "University of Hertfordshire",
type = "WorkingPaper",
institution = "University of Hertfordshire",

}

RIS

TY - UNPB

T1 - The Effect of Financial Systems on Earnings Management Among Firms Reporting Under IFRS

AU - Paananen, M.

PY - 2006

Y1 - 2006

N2 - This study examines the relation between financing system and earnings management and changes in the patterns of earnings management activities over time. Prior research suggests that managers are more likely to manage earnings in a credit financing system because the purpose of the financial reporting in this credit environment is to protect creditors by prudently calculating distributable profit. In addition, multinational enterprises financial reporting tends to be anchored in their home countrys practices and responsive to their national requirements. Using 121 firm-year observations of non-U.S. firms reporting under IFRS, we find some evidence that firms from credit financing systems manage earnings more than firms from equity financing systems. We find that firms in a credit financing environment report 1.6% higher in absolute discretionary accruals than equity firms. However, we did not find evidence that overall earnings management activities have decreased as the IASBs Comparability/Improvements Project went into effect after 1995. This finding suggests that the IASB has not been effective in narrowing down the international differences in accounting practices and providing comparable financial statements to the public.

AB - This study examines the relation between financing system and earnings management and changes in the patterns of earnings management activities over time. Prior research suggests that managers are more likely to manage earnings in a credit financing system because the purpose of the financial reporting in this credit environment is to protect creditors by prudently calculating distributable profit. In addition, multinational enterprises financial reporting tends to be anchored in their home countrys practices and responsive to their national requirements. Using 121 firm-year observations of non-U.S. firms reporting under IFRS, we find some evidence that firms from credit financing systems manage earnings more than firms from equity financing systems. We find that firms in a credit financing environment report 1.6% higher in absolute discretionary accruals than equity firms. However, we did not find evidence that overall earnings management activities have decreased as the IASBs Comparability/Improvements Project went into effect after 1995. This finding suggests that the IASB has not been effective in narrowing down the international differences in accounting practices and providing comparable financial statements to the public.

M3 - Working paper

T3 - Business School Working Papers

BT - The Effect of Financial Systems on Earnings Management Among Firms Reporting Under IFRS

PB - University of Hertfordshire

ER -