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Mandatory IFRS adoption and earnings quality in different institutional settings: a comparison between Italy and the UK

Mandatory IFRS adoption and earnings quality in different institutional settings: a comparison... Evidence pertaining to the effect of IFRS adoption on earnings quality in the EU is mixed with results varying by country. Potential reasons for the conflicting results include the diverse institutional settings in which European firms operate as well as methodological issues. We use a sample of firms operating in Italy and in the UK, matched on the basis of size and industry, to examine the relative changes in earnings quality after the mandatory IFRS introduction. Our results refute the suggestion that IFRS are not suitable for code law countries while they accept the evidence that IFRS do not improve earnings quality when it is already at an adequate level. Keywords: earnings quality; mandatory IFRS adoption; institutional setting; Italy; UK. Reference to this paper should be made as follows: Campa, D. and Donnelly, R. (2016) ` in different institutional settings: a comparison between Italy and the UK', Int. J. Accounting, Auditing and Performance Evaluation, Vol. 12, No. 1, pp.24­44. Biographical notes: Domenico Campa is a Professor of Accounting at the International University of Monaco and has served as a member of the board of the European Accounting Association. His research interests include corporate governance, earnings quality, the effect http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Accounting, Auditing and Performance Evaluation Inderscience Publishers

Mandatory IFRS adoption and earnings quality in different institutional settings: a comparison between Italy and the UK

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Publisher
Inderscience Publishers
Copyright
Copyright © 2016 Inderscience Enterprises Ltd.
ISSN
1740-8008
eISSN
1740-8016
DOI
10.1504/IJAAPE.2016.073886
Publisher site
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Abstract

Evidence pertaining to the effect of IFRS adoption on earnings quality in the EU is mixed with results varying by country. Potential reasons for the conflicting results include the diverse institutional settings in which European firms operate as well as methodological issues. We use a sample of firms operating in Italy and in the UK, matched on the basis of size and industry, to examine the relative changes in earnings quality after the mandatory IFRS introduction. Our results refute the suggestion that IFRS are not suitable for code law countries while they accept the evidence that IFRS do not improve earnings quality when it is already at an adequate level. Keywords: earnings quality; mandatory IFRS adoption; institutional setting; Italy; UK. Reference to this paper should be made as follows: Campa, D. and Donnelly, R. (2016) ` in different institutional settings: a comparison between Italy and the UK', Int. J. Accounting, Auditing and Performance Evaluation, Vol. 12, No. 1, pp.24­44. Biographical notes: Domenico Campa is a Professor of Accounting at the International University of Monaco and has served as a member of the board of the European Accounting Association. His research interests include corporate governance, earnings quality, the effect

Journal

International Journal of Accounting, Auditing and Performance Evaluation – Inderscience Publishers

Published: Jan 1, 2016

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