Earnings Management and the Quality of Financial Reporting: A Pre-Post IFRS Adoption Comparative Analysis for Companies Listed on the Bucharest Stock Exchange

Author:Elena NECHITA, Ph.D. Student

JEL:M41

DOI:

Keywords:earnings management, quality of financial reporting, International Financial Reporting Standards, listed companies, Bucharest Stock Exchange

Abstract:
This research aims to analyse the phenomenon of earnings management as a result of implementing the International Financial Reporting Standards (IFRS) in the individual financial statements prepared by the companies listed on the Bucharest Stock Exchange (BSE) as a regulatory requirement from the financial year 2012. Beginning with a description of the legal framework for financial reporting in Romania, this research reveals through a pre-post IFRS adoption comparative analysis to what extent there is evidence of income smoothing practices for companies listed on the BSE after the adoption of IFRS, and whether the carrying amounts of these companies have greater value relevance in terms of share price evolution with the transition to IFRS. The research contributes to literature enhancement by pointing the implications of IFRS adoption in the emerging economies.\r\n\r\n

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