International Accounting Standards And Accounting Quality (2002 Journal Of Accounting Standards

‘International Accounting Standards and Accounting Quality’(2002) Journal of Accounting Research

In the scholarly article ‘International Accounting Standards and Accounting Quality’ written by Marye Barth, Stanford University, Wayne Landsman and Mark Lang, University of North Carolina, a series of comparisons have been made between the accounting quality of firms that adopt International Accounting Standards (IASs) and the firms that do not. The basic concept from where their research stems from is the implementation of higher quality of financial reporting standards issued by international accounting body namely, International Accounting Standards Board (IASB). The scholars in their research have in fact aimed to re-confirm the conclusions

This premise was further elaborated by discussing the fact that although the prediction of the research pointed more towards the quality of accounting in firms which adopted IASs was going to be better, there do exists factors other than the IASs themselves which could help in being for or against the argument. The possibility of IAS of being lower in quality than domestic standards, inherent flexibility in the IASs, characteristic of the company standards are adopted in (listed vs un-listed companies), economic environment, weak regulation and infrastructure in developing economies, incentives, different measures of accounting quality and value relevance. These premise continue to be in line with previous studies as well. (Miller,

The level of accounting quality in terms of earnings management, timely loss recognition and more value relevance were better in firms that applied IAS. All this being presented in a very relevant manner clearly displaying compositions of the firms selected. Evidence showed that there was less earnings management in firms that applied IAS as the IAS left less room for manipulation to results to present desired financial picture of a firm, earnings were less smoothed and hence there was larger variances in earning reported specially with respect to earnings, cash flows and accruals and hence showing the actual picture to users of financial statements. (Lang, [2003]) Secondly, when evaluating value relevance is was concluded that as inherently high as well, the value for listed and regulated firms the relevance was high before and after adoption, hence no significant change. Lastly, with reference to timely loss recognition, again it was evidenced that all loses were timely reported and not allowed to be carried forwards or left to be recognized on the discretion of the management, as consistency in policies is expected to be applied once IASs are adopted. There were some evidence however, that suggested that in some firms belonging to particular industries, in some countries showed no significant variance in time loss recognition and