The Relationship Between the IFRS Adoption and Firm’s Earnings Management: Evidence from the UK

Abstract

Aim: This proposed study will examine the effect of reporting under the International Financial Reporting Standards (hereafter IFRS) versus reporting under UK GAAP on earnings management in the UK. Rationale: Prior studies found mixed evidence regarding the effect of voluntary and mandatory adoption of IFRS on earnings quality. This study will test whether the effect of reporting under IFRS on earnings management is sufficient to overcome earnings management incentives. Research Questions: 1. What is the relationship between IFRS reporting and the earnings management’s discretionary accruals in the UK? 2. Does the IFRS reporting conditional to the earnings management’s direction? 3. Does the relationship between IFRS reporting and earnings management depend on audit quality as a proxy of the size of audit firm