Investigating the Influence of IFRS Adoption on the Quality of Accounting Practices: A Review on Augmented Disclosure Demands

Abstract

This paper conducts a comprehensive review of the existing literature on the impact of conforming to International Financial Reporting Standards (IFRS) on accounting quality, specifically examining its influence on manipulative practices in reporting earnings and the enhancement of the value relevance of financial information. The Scopus database was used to gather a sample of 68 research publications, and the inclusion criteria were based on factors that affect the quality of accounting, earnings management, value relevance, and clarity of accounting practices. Results show that value relevance increased due to the adoption of IFRS; this increase is attributed to improved financial reporting's disclosure, comparability, and transparency. According to several studies, value relevance has not altered, conforming to recently established local GAAP criteria. Additionally, investors benefit from a notable decrease in information asymmetry and earnings mismanagement following adoption. The paper contributes to future research by identifying potential areas of study related to the impact of disclosure requirements on enhancing financial reporting integrity and understanding investor attitudes towards increased accounting transparency.

Keywords: IFRS adoption, disclosure requirements, accounting transparency, Value relevance, earnings mismanagement

JEL Classification: M4