TY - JOUR
T1 - Unintended effects of IFRS adoption on earnings management: The case of Latin America
AU - Mongrut, Samuel
AU - Winkelried, Diego
N1 - Publisher Copyright:
© 2018 The Authors
PY - 2019/3/1
Y1 - 2019/3/1
N2 - We study the determinants of earnings opacity in the six largest Latin American economies (Argentina, Brazil, Chile, Colombia, Mexico, and Peru), in particular the effects of adopting IFRS. Using panel data on 871 listed firms during the period 2000 to 2016, we find that in Latin America the adoption of IFRS caused firms to substitute high quality audit practices with the newly imposed regulation, to the extent that its effect on the degree of opacity in the region became unintendedly positive. The results hold after a number of robustness checks. Thus, we provide compelling evidence against the belief that the mere adoption of the IFRS is sufficient to guarantee transparency in emerging markets.
AB - We study the determinants of earnings opacity in the six largest Latin American economies (Argentina, Brazil, Chile, Colombia, Mexico, and Peru), in particular the effects of adopting IFRS. Using panel data on 871 listed firms during the period 2000 to 2016, we find that in Latin America the adoption of IFRS caused firms to substitute high quality audit practices with the newly imposed regulation, to the extent that its effect on the degree of opacity in the region became unintendedly positive. The results hold after a number of robustness checks. Thus, we provide compelling evidence against the belief that the mere adoption of the IFRS is sufficient to guarantee transparency in emerging markets.
KW - Accounting regulation
KW - Audit quality
KW - Earnings management
KW - Policy effects
KW - Accounting regulation
KW - Audit quality
KW - Earnings management
KW - Policy effects
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UR - https://www.mendeley.com/catalogue/902e5b4f-f256-366e-92c6-7377952a9022/
U2 - 10.1016/j.ememar.2018.11.004
DO - 10.1016/j.ememar.2018.11.004
M3 - Article in a journal
SN - 1566-0141
VL - 38
SP - 377
EP - 388
JO - Emerging Markets Review
JF - Emerging Markets Review
ER -