Thesis Abstract and Dissertation Abstracts
Corporate Governance, Ifrs Adoption And Earnings Quality: A Comparative Analysis Between A Common Law And A Code Law Country
Abstract Category: Accounts and Economics
Course / Degree: PhD in Accounting
Institution / University: University College Cork, Ireland
Published in: 2011
The thesis examines the efficacy of a firm’s corporate governance and board structure in curbing earnings management and whether it is affected by the legal jurisdiction in which the firm operates. It also investigates whether IFRS adoption affects the results and takes the opportunity to contribute evidence of the effect of IFRS introduction on the earnings quality in different legal systems. This is done using a matched- pairs sample of companies listed in one common law country, the UK, and one code law country, Italy. It is reported that the overall corporate governance and board structure significantly mitigate earnings management. The effect is stronger in a code law context where these mechanisms act as an effective substitute for a weaker legal protection. The negative relation between corporate governance/board structure and earnings management and the stronger effect in Italy are not affected by the harmonization of accounting standards. A detailed analysis of each individual corporate governance attribute shows that institutional investor ownership is the most important feature of UK governance in terms of reducing earnings management, while the avoidance of CEO duality prevails in Italy. These results suggest that corporate governance is more important where the law cannot ensure an adequate investor protection on average. The stronger effect of corporate governance in Italy results in the same earnings quality under local GAAP, in comparison with the UK, and in a superior quality after IFRS introduction: this is an interesting exception to the extant literature. Evidence from the impact of IFRS adoption on the quality of earnings shows that it has remained unchanged in Italy post IFRS but has slightly declined in the UK. This would indicate that the introduction of high quality standards, per se, could not improve earnings quality because accounting rules are only one of the determinants of accounting quality.
Thesis Keywords/Search Tags:
Earnings management, institutional setting, corporate governance, IFRS adoption
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Submission Details: Thesis Abstract submitted by Dome Campa from Italy on 13-Oct-2011 14:55.
Abstract has been viewed 3395 times (since 7 Mar 2010).
Dome Campa Contact Details: Email: domy-n1@hotmail.com
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