استانداردهای بین‌المللی گزارشگری مالی و کیفیت اطلاعات صورت‌های مالی

This study focuses on the adoption of the International Financial Reporting Standards (IFRSs) in the UK and concentrates in the switch from the UK GAAP to IFRSs. The study seeks to determine whether IFRS adoption leads to higher quality accounting numbers. By examining company accounting measures reported under the UK GAAP and IFRSs, the study investigates the earnings management potential under IFRSs. The paper also studies the value relevance of IFRS-based financial statement information. The study indicates that the implementation of IFRSs generally reinforces accounting quality. The findings show that the implementation of IFRSs reduces the scope for earnings management, is related to more timely loss recognition and leads to more value relevant accounting measures. This suggests that less information asymmetry and earnings manipulation would lead to the disclosure of informative and higher quality accounting information and would therefore assist investors in making informed and unbiased judgements.

Agency theory makes a number of predictions regarding the behaviour of managers. It would suggest that by adopting IFRSs, firms act optimally and promote financial reporting quality and investor interests (see Fields, Lys & Vincent, 2001). For example, highly leveraged firms would be keen to adopt IFRSs in order to satisfy the needs of lenders and the requirements of debt covenants and/or avoid political attention and scrutiny (see Lambert, 2001). Healy (1985) suggests that the flexibility allowable in financial reporting may cause managers to behave opportunistically (see Burgstahler & Dichev, 1997 and Weil et al., 2006). This would imply that managers might manage the reported earnings in order to demonstrate a favourable transition to IFRSs (DeFond & Park, 1997, Hand & Skantz, 1998 and Fields et al., 2001) or to avoid adverse implications on their profit figures and debt-paying ability (Watson, Shrives & Marston, 2002). A crucial question is how the adoption of IFRSs would affect accounting quality. The fact that the UK is considered to be a common-law country with active stock and debt markets, a diverse base of investors, strong investor protection mechanisms and investor-oriented financial reporting1 (Tendeloo & Vanstraelen, 2005) might have benefited the transition process. Previous studies (Tarca, 2004, Barth et al., 2005, Lang et al., 2005, Tendeloo & Vanstraelen, 2005 and Hung & Subramanyam, 2007) exhibit that IFRSs are information-oriented and improve the quality of financial reporting, thereby meeting the information needs of investors and reinforcing the structures of the stock market. The study focuses on firms listed on the London Stock Exchange and determines whether the adoption of IFRSs has improved accounting quality. The implementation of IFRSs is compulsory for listed firms that belong to member states of the European Union (1606/2002/EC), the effective date being 1 January 2005.2 The study is exploratory in nature and tests for systematic differences among UK firms in the light of IFRS adoption. The period under analysis is the official period of adoption, i.e. 2005, and the pre-official adoption period, i.e. 2004. The empirical investigation concentrates in the examination of the earnings management potential under IFRSs and the value relevance of IFRS-based accounting reports as compared to UK GAAP. The study shows that IFRS adoption reduces the scope for earnings management, leads to more timely loss recognition and to more value relevant accounting measures. The motivation of the study relates to whether a particular accounting method/rule has a real impact, such that managerial decisions would need to be altered to minimise the adverse effects of the accounting change. The adverse impact of an accounting change could be mitigated by smoothing the accounting numbers and manipulating the accounting change to suit the financial decisions of the firm (see Bazaz & Senteney, 2001). Such information would be useful for the accounting standard setting process, particularly with regard to whether stricter or more flexible financial reporting should be imposed (see Levitt, 1998). There have been a number of studies about IFRS implementation in different national settings. For example, Eccher and Healy (2003) study IFRSs and the Chinese GAAP, while Leuz (2003) and Hung and Subramanyam (2004) study IFRSs and the German GAAP. The UK is a common-law country with strong investor protection mechanisms in place, while for example Germany and China are code-law countries. Hence, it would be fruitful to investigate the situation for such a setting and to identify the impact of IFRS adoption on accounting quality, taking into consideration that the UK GAAP is a common-law and investor-oriented system. The Accounting Standards Board (2003) has identified a number of differences between IFRSs and the UK GAAP, which are presented in Appendix C. The remaining sections of the study are as follows. Section 2 presents the theoretical background of the study. Section 3 shows the research hypotheses. Section 4 describes the datasets and the research structure of the study. Section 5 discusses the empirical findings, and Section 6 presents the conclusions and implications of the study.

In the light of the compulsory implementation of IFRSs, as of 1 January 2005, this study investigates the impact of IFRS adoption on UK firms' financial numbers. The study explores major issues, such as the earnings management potential and the value relevance of IFRS-based accounting numbers. The study indicates that the two financial reporting systems display significant differences and therefore affect firms in a different manner. Following the fair value orientation of IFRSs, IFRS adoption is likely to introduce volatility in income statement and balance sheet figures. The reporting of less smooth accounting numbers together with the timely recognition of large losses in the income statement and the less frequent reporting of small profits, as a means of managing earnings toward a target (see Barth et al., 2005), signifies the lower potential for earnings management under IFRSs. The study also shows that IFRS implementation leads to more value relevant accounting measures (see also Barth et al., 2005, Tendeloo & Vanstraelen, 2005 and Hung & Subramanyam, 2007). IFRS implementation standardises the accounting practice and reduces information asymmetry and the scope for earnings manipulation, thereby enhancing stock market efficiency. The study gives information about the earnings management potential and value relevancy that relate to the introduction of accounting regulation, which is essential for accounting standard setting bodies, especially when they prepare or review a change in accounting regulation. The findings of the study relating to the earnings management potential under IFRSs and the value relevance of IFRS-based financial information are useful for financial analysts and stock market authorities, as they enable them to reinforce the current auditing and supervisory framework and assist investors in making unbiased predictions about firms' future performance. To this end, the annual accounts should be sufficiently and properly investigated by internal and external auditors, in order to ensure that the reported accounting numbers reflect the true financial situation of a firm and do not mislead investors (Cervantes, 2004). The study also formulates a basis for studying firms' behaviour with regard to other accounting and national settings, for example, common-law and code-law accounting regimes, separately and jointly. The findings of such studies would shed light on the manner in which different accounting regimes adjust to IFRSs. For example, countries that are closer to IFRSs would be expected to experience a smoother IFRS transition. A central area of interest for the international accounting literature will be the transition of the US to IFRSs. This study can be the basis for studying the transition to IFRSs from the US GAAP as well as from other national GAAPs. The investigation of the IFRS effects however should require the consideration of the respective national institutional background and differences compared to IFRSs. The study would also be useful as a basis for examining the impact of adopting the IFRS for Small and Medium-sized Entities or for assessing the impact of IFRS 9 ‘Financial Instruments’. Future research should also concentrate in a per case detailed and distinctive examination of the reported differences between IFRSs and the UK GAAP and report how the underlying differences affect firm performance and future prospects. The question that arises here is how accounting regulation should be improved to encompass all possible areas of accounting practice. The financial crisis and the arising volatility would tend to adversely affect company financial figures and stock market efficiency (Lim, Brooks & Kim, 2008). Fair value determinations should be based on certain and reliable information that may be hard to obtain in fluctuating markets (Deloitte & Touche, 2006). This would imply that companies would need to re-define their fair value formulas, re-examine their risk factors, revisit their debt covenants, etc. In the light of the financial crisis, the IASB has highlighted a number of issues, such as consolidation, derecognition, disclosures, asset impairment, accounting for collateralised debt obligations, financial asset reclassification, off-balance sheet items, and fair value estimation, which might need further attention. Disclosure requirements are the focus of the Board when it comes to fair value measurements of financial instruments, especially in illiquid markets or when limited market data is available to obtain reliable estimations. Future research should also examine the stock market behaviour relating to regulatory announcements in periods of crisis, and provide regulatory and market authorities with insight on crisis management.