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Earnings Management under IFRS

Backaliden, David LU and Nilhag, Ragnar LU (2017) BUSN79 20171
Department of Business Administration
Abstract
Title: Earnings Management under IFRS

Date of seminar: 2017-05-29

Authors: David Backaliden & Ragnar Nilhag

Supervisor: Peter W. Jönsson

Keywords: Earnings Management, Discretionary Accruals, Jones Cash Flow Model, IFRS, Conservatism.

Purpose: To investigate how the introduction of IFRS for listed companies in Sweden has affected Swedish listed companies' use of earnings management.

Method: A quantitative method with a deductive approach. Estimation of parameters in the Jones Cash Flow Model cross-sectionally.

Theory: A review of the different ways in which firms can engage in earnings management. Furthermore, we review the link between accounting standards and earnings management, and how the use of an accounting... (More)
Title: Earnings Management under IFRS

Date of seminar: 2017-05-29

Authors: David Backaliden & Ragnar Nilhag

Supervisor: Peter W. Jönsson

Keywords: Earnings Management, Discretionary Accruals, Jones Cash Flow Model, IFRS, Conservatism.

Purpose: To investigate how the introduction of IFRS for listed companies in Sweden has affected Swedish listed companies' use of earnings management.

Method: A quantitative method with a deductive approach. Estimation of parameters in the Jones Cash Flow Model cross-sectionally.

Theory: A review of the different ways in which firms can engage in earnings management. Furthermore, we review the link between accounting standards and earnings management, and how the use of an accounting standard can affect the degree of manipulation as well as what impact earnings management has on accounting quality.

Results: The use of discretionary accruals has decreased in the time period following IFRS as compared to the time period prior to IFRS adoption. In both time periods the general pattern is to create hidden reserves.

Analysis: The magnitude of earnings management has decreased substantially following IFRS adoption among Swedish listed companies. The use of conservative strategies such as the creation of hidden reserves appear in both time periods, however the adoption of IFRS has decreased the magnitude of the conservative approach to earnings management.

Conclusion: The results indicate that the more principle-based IFRS accounting model leaves a smaller scope for earnings management among Swedish listed companies than the national framework Swedish GAAP did. For standard setters such as IASB, these findings are likely to confirm their intuition that IFRS leads to better earnings quality compared to the Swedish GAAP. (Less)
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author
Backaliden, David LU and Nilhag, Ragnar LU
supervisor
organization
course
BUSN79 20171
year
type
H1 - Master's Degree (One Year)
subject
keywords
Earnings Management, Discretionary Accruals, Jones Cash Flow Model, IFRS, Conservatism
language
English
id
8927919
date added to LUP
2019-11-11 16:26:38
date last changed
2019-11-11 16:26:38
@misc{8927919,
  abstract     = {Title: Earnings Management under IFRS

Date of seminar: 2017-05-29

Authors: David Backaliden & Ragnar Nilhag

Supervisor: Peter W. Jönsson

Keywords: Earnings Management, Discretionary Accruals, Jones Cash Flow Model, IFRS, Conservatism.

Purpose: To investigate how the introduction of IFRS for listed companies in Sweden has affected Swedish listed companies' use of earnings management.

Method: A quantitative method with a deductive approach. Estimation of parameters in the Jones Cash Flow Model cross-sectionally.

Theory: A review of the different ways in which firms can engage in earnings management. Furthermore, we review the link between accounting standards and earnings management, and how the use of an accounting standard can affect the degree of manipulation as well as what impact earnings management has on accounting quality.

Results: The use of discretionary accruals has decreased in the time period following IFRS as compared to the time period prior to IFRS adoption. In both time periods the general pattern is to create hidden reserves.

Analysis: The magnitude of earnings management has decreased substantially following IFRS adoption among Swedish listed companies. The use of conservative strategies such as the creation of hidden reserves appear in both time periods, however the adoption of IFRS has decreased the magnitude of the conservative approach to earnings management.

Conclusion: The results indicate that the more principle-based IFRS accounting model leaves a smaller scope for earnings management among Swedish listed companies than the national framework Swedish GAAP did. For standard setters such as IASB, these findings are likely to confirm their intuition that IFRS leads to better earnings quality compared to the Swedish GAAP.},
  author       = {Backaliden, David and Nilhag, Ragnar},
  keyword      = {Earnings Management,Discretionary Accruals,Jones Cash Flow Model,IFRS,Conservatism},
  language     = {eng},
  note         = {Student Paper},
  title        = {Earnings Management under IFRS},
  year         = {2017},
}