Do Accounting Standards Matter?: Do Accounting Standards Matter?

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Recommended: Introduction of accounting standards

The adoption of IFRS Introduction The article ‘Do accounting standards matter?’ investigates if the adoption of one reporting standard across a multitude of countries has had an effect on the quality earnings management (Jeanjean & Stolowy, 2008). The investigation has been conducted by looking into firms that have adopted IFRS at the transition date and were not early adopters. Concentrating on three countries that changed due to the mandatory enforcement, rather than seeing the value in the adoption stops the investigation from being bias, as they are neutral about the change. By analysing the distributions of earnings management, to see if the pervasiveness has improved, the effect the standards can be proved (Jeanjean & Stolowy, 2008). …show more content…

When looking at local institutions adopting IFRS, there is significant importance in them understanding the accounting standards so that their judgements are in align with what the standard is designed to do, give quality to the reports by allowing them to be comparable. As seen in this article management incentives can influence the judgement decisions, so each local firm having a deep understanding of how to correctly implement IFRS is important because if IFRS is going to be successful in one country all the firms that make up that economy need to be interpreting the accounting standards in the same way. If IFRS is not implemented correctly the quality of the financial statements hold little value. If when implementing IFRS local institutions are aware of the importance of understanding IFRS then worldwide the financial information reported will mean more to investors and other users of the financial

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