IFRS Adoption and Accounting Quality: A Review
Naomi S. Soderstrom
University of Melbourne
Kevin Jialin Sun
St. John's University
European Accounting Review, Forthcoming
In 2002, the European Union (EU) Parliament passed a regulation that requires consolidated and simple accounts for all companies listed in the EU to use International Financial Reporting Standards (IFRS) for fiscal years starting after January 1, 2005. This change in accounting systems will have a large impact on the information environment for EU companies. This paper provides a review of the literature on adoption of different GAAPs. We thus provide background and guidance for researchers studying the change in accounting quality following widespread IFRS adoption in the EU. We argue that cross-country differences in accounting quality are likely to remain following IFRS adoption because accounting quality is a function of the firm's overall institutional setting, including the legal and political system of the country in which the firm resides.
Number of Pages in PDF File: 45
Keywords: IFRS, Accounting Quality, Institutional Effects
JEL Classification: M41, M44, M47, G38
Date posted: August 26, 2007
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