The Impact of Improvements in Institutional Oversight on IFRS Accrual Quality in Europe

Kabir, H. and Laswad, H. The Impact of Improvements in Institutional Oversight on IFRS Accrual Quality in Europe. Australian Accounting Review. Forthcoming.

40 Pages Posted: 12 Aug 2015

See all articles by Humayun Kabir

Humayun Kabir

Auckland University of Technology

Fawzi Laswad

Massey University

Date Written: August 12, 2014

Abstract

This study examines the impact of improvements in institutional oversight specifically for compliance with International Financial Reporting Standards (IFRS) on accrual quality in Europe. The sample comprises 9339 firm-year observations from a treatment sample of three European countries that had either non-existent or relatively weak institutional oversight systems at the start of the sample period 2006-10 but improved their oversight systems thereafter, and a benchmark sample of six other European countries that had institutional oversight systems from the start of this sample period. After controlling for legal system, rule of law and other variables, we find incremental improvement in accrual quality in the treatment sample relative to the benchmark sample from the pre-enforcement period 2006-07 to the enforcement period 2008-10. The results suggest that institutional oversight has an incrementally positive impact on accrual quality over and above that attributable to legal system, rule of law and other variables. The results are robust to different measures of accrual quality, alternative enforcement proxy and alternative samples.

Keywords: accrual quality; enforcement; IFRS; institutional oversight

JEL Classification: M41, M42

Suggested Citation

Kabir, Humayun and Laswad, Fawzi, The Impact of Improvements in Institutional Oversight on IFRS Accrual Quality in Europe (August 12, 2014). Kabir, H. and Laswad, H. The Impact of Improvements in Institutional Oversight on IFRS Accrual Quality in Europe. Australian Accounting Review. Forthcoming. , Available at SSRN: https://ssrn.com/abstract=2642755

Humayun Kabir (Contact Author)

Auckland University of Technology ( email )

AUT City Campus
Private Bag 92006
Auckland, 1142
New Zealand
+64 21 08309355 (Phone)

Fawzi Laswad

Massey University ( email )

Palmerston North
New Zealand

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