rrl matrix- topic 1 effect of the new ifrs 15 adoption- revenue recognition to earnings quality of...

Bibliography Details (title. author.year. volume no etc. url. date

retrieved)Summary of Abstract/ Contribution

to the TopicData Needed (distinguish the

dependent & independent variables) Methodology/Statistical Technique Findings

IFRS 15 Revenue from Contractswith Customers. IFRS. May 2014.http://www.ifrs.org/Current-Projects/IASB-Projects/Revenue-Recognition/Documents/IFRS-15/Revenue-from-Contracts-Project-summary-Feedback-Statement-May-2014.pdf. Feb 28

described the reason for the newstandard, the framework,requirements and the changes thatit would bring aboutpresented thefeedback of affected persons andthe board’s response

The Effect of IFRS on EarningsQuality in a European StockMarket: Evidence from France.Chiha, H. & Trabelsi, N. & Hamza,S. 2013. Interdisciplinary Journal ofResearch in Business. Vol. 2,Issue. 12.http://www.idjrb.com/articlepdf/article2124.pdf. Feb 28 -may be amother article

examines the impact of IFRSadoption on earnings quality for asample of listed companies in aEuropean stock market for 9periods

info found in fsbvpseps

Earnings quality is examined bymeasuring the strength of theassociation between earnings andfirm market value (regression)model used in this study draws onthe work of Burgstahler and Dichev(1997), Barth et al. (1998) andZhang (2000) who considered thatthe carrying value of the businessand profit are two complementaryvariables that explain the sharevalue.

accounting information quality hasbeen improved by the increase ofthe association degree

Market Reaction to the Adoption ofIFRS in Europe. Armstrong, C. &Barth, M. & Jagolinzer, A. & Riedl,E. Sep 2008. Harvard BusinessSchool.http://www.hbs.edu/faculty/Publication%20Files/09-032.pdf, Feb 28

examines the European stockmarket reaction to sixteen eventsassociated with the adoption ofInternational Financial ReportingStandards (IFRS) in Europe

info quality factorstandardsappliedExchanges, the number ofexchanges on which the firm islisted during the event year;Size, the natural logarithm of thefirm’s prior end of year marketvalue of equitytype ofbankturnoverpercentage of sharesheld by shareholdersHerf rangesfrom zero to one, with higher valuesindicating that within-industry salesare concentrated in fewer firms

event-study research designbaseour tests on European firms’ three-day value-weighted market-adjusted returns construct portfolioevent returns by value weightingeach firm’s return based on thefirm’s equity market value at theend of the most recent quarter priorto the eventt-testcross-sectional analysis

more positive reaction for firms withlower quality pre-adoptioninformation, which is morepronounced in banks, and withhigher pre-adoption informationasymmetry, consistent withinvestors expecting net informationquality benefits from IFRSadoption.reaction is less positive forfirms domiciled in code lawcountries, consistent with investors’concerns over enforcement of IFRSin those countries.positive reactionto IFRS adoption events for firmswith high quality pre-adoptioninformation, consistent withinvestors expecting netconvergence benefits from IFRSadoptionresults suggest thatinvestors in European firmsperceived net benefits

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IFRS 15 – the new revenuerecognition standard Impact onmining and metals entities. Ernst &Young. September 2014.http://www.ey.com/Publication/vwLUAssets/EY-Devel-MM-RevRec-Sept2014/$FILE/EY-Devel-MM-RevRec-Sept2014.pdf. March1

examines the impact of ifrs 15 onmining and metal entities qualitative qualitative

IFRS Industry Insights on theimpact of IFRS 15. Deloitte. 2014.http://www.iasplus.com/en-us/collections/topics/revenue/ifrs-insights-revenue. March 1

discusses the changes and impactof IFRS 15 to various industries qualitative qualitative

A Returns-Based Representation ofEarnings Quality. Ecker, F. &Francis, J. & Kim, I. & Olsson, P. &Schipper, K. Nov 2005.https://faculty.fuqua.duke.edu/~jfrancis/bio/Ecker%20et%20al.%20%5bNovember%202005%5d.pdf. March1

examined the properties of areturns-based representation ofearnings quality, estimated fromfirm specific asset pricingregressions augmented by anearnings quality mimicking factor

info found in fs

coefficient on the earnings qualityfactor (the “e-loading”) captures thesensitivity of the firm’s returns toearnings quality in a given year orquarter, analogous to beta as ameasure of the sensitivity of returnsto market movementsestimatedusing either a firm-specific time-series of annual data or industrycross-sectionsDechow andDichev’s accruals quality metric tocapture earnings qualityassignfirms to AQ deciles using a dynamicportfolio technique then calculatethe average daily return for eachdecile correlate AQfactor with thereturns of any firm to determine thatfirm’s exposure to poor earningsquality, much like we correlate afirm’s returns with the market riskpremium to obtain a measure of itsexposure to market risknextestimate firm-year e-loadings forthe Returns Sample

returns-based measures ofearnings quality are mostappropriate in research settingsthat analyze changes in financialreporting quality, either because ofa required change in reporting orbecause of a voluntary reporting ordisclosure decisioninvestors’perceptions of earnings quality arerational document that e-loadingsare a reliable returns-basedrepresentation of earnings qualityas measured by accruals quality

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ANALYSIS: IFRS 15 REVENUERECOGNITION WILL NEVER BETHE SAME AGAIN. AccountancySA. July 2014.http://www.accountancysa.org.za/analysis-ifrs-15-revenue-recognition-will-never-be-the-same-again/.March 1

discusses the implications of thenew standard qualitative qualitative

Earnings Quality Metrics and WhatThey Measure. Ewert, R. &Wagenhofer, A. Sep 2010.https://www.kellogg.northwestern.edu/accounting/papers/Ewert.pdf.March 1

discusses and evaluates theusefulness and appropriateness ofcommonly used earnings metrics

operating risk private information ofthe manager about the operatingrisk.accounting riskmanagementincentives

define earnings quality as thereduction of the market’suncertainty about the firm’s terminalvalue due to the earnings reportand compare this measure withvalue relevance, persistence,predictability, smoothness, andaccrual qualityessentially model apure exchange economy with onerisky asset (the firm)accountingsystem signalscloser the behaviorof a particular metric is in line withthat of EQ upon a variation of adetermining factor of earningsquality, the more appropriate is itsuse in empirical studies

each metric captures differenteffects, but some of them, includingvalue relevance and persistence,are closely related to our earningsquality measureDiscretionaryaccruals are problematic as theirbehavior depends on specificcircumstancesprovide insights intoregulatory changes and guidancefor selecting earnings qualitymetrics in empirical tests ofearnings quality

Earnings Quality: It’s Time toMeasure and Report. Bellovary, J.& Giacomino, D. & Akers, M. Nov2005. The CPA Journal.http://www.nysscpa.org/cpajournal/2005/1105/essentials/p32.htm.March 1

presented a brief and generaloverview on earnings quality qualitative qualitative

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Earnings Management under IFRSand PGC. Tort, L. 2013.http://www.accid.org/revista/documents/Earnings_Management_under_IFRS_and_PGC.pdf. March 1

examine whether the adoption ofprinciples-based IFRS by Spanishcompanies has increased ordecreased the scope fordiscretionary accounting practices-earnings management (EM) incomparison to rules-based GAAPdetermine which firms’ features andcountry factors may explain theaccounting discretion observedbefore and after IFRSshowedmeasurements of earningsmanagement

qualitative qualitativevariations in EM might be due tosome room for manipulation underIFRS when compared with localstandards

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Effects of IFRS adoption onearnings quality: Evidence fromCanadaHai Q. TaJune 2014file:///C:/Users/samsung/Downloads/OBJ%20Datastream.pdf

-examines the effects of the IFRSadoption on earnings quality of1245 Canadian firms- analyze the effects IFRS adoptionon earnings persistence, earningspredictability, persistence ofearnings components, cash flowpredictability, accruals quality,value relevance, earningssmoothness, conservatism, andtimeliness.

first group of earnings qualitymeasures focus on is indicative ofsustainable, repeatable, andbacked-by-cash flows earnings.The second group of earningsquality measures in this papercaptures the value relevance ofearnings because it is a directproxy for earnings qualityThe lastgroup of earnings quality measuresincludes earnings smoothness,conservatism, and timeliness

earnings quality of Canadian firms,on average, improves following theadoption and the improvements aremostly driven not by U.S. adoptersbut by IFRS adopters, suggestingthat IFRS has a positive impact onearnings quality

The Effects Of Mandatory IASIFRSRegulation On The Properties OfEarnings’ Quality In Australia AndEuropeBahloul Jaweher & Ben ArabMouniraEuropean Journal of Business andManagementISSN 2222-1905 (Paper) ISSN2222-2839 (Online)Vol.6, No.3, 2014

verifying whether the IFRSregulation produces betterearnings’ quality than local GAAPregulation for listed companies in17 countries from Australia andEurope

a sample of 1,901 listed firms fromAustralia and European countriesthat adopted IFRS for fiscal yearsending in December, 2005. Theanalysis covers the period2001–2010, split into two sub-periods (2001–2004 and2005–2001) in order to reflect theearnings quality before and afterthe application of IFRS

-This study attempts to explore therelationship between accountingstandards and the qualitativecharacteristics of earnings asoperationalized in the previoustheoretical and empirical papers. -used eight proxies: valuerelevance, predictability,persistence, timeliness, timely lossrecognition, smoothing, managingearnings toward targets andaccruals quality.-focus on the earnings’ quality of1,901 publicly listed companies in17 countries coming from Europeand Australia, before and after theIFRS adoption in 2005. Thisanalysis is designed to address thequestion as to which of twoaccounting standards (IFRS orGAAP) is preferable- present briefly each earnings’quality properties along with adescription of the empirical models.In the estimation of each models,tehy applied the Breush-Pagan testin order to control forheteroscedasticity and theWooldrigde test in order to controlfor auto-correlation of the standarderror.

-‘ceteris paribus’, the mandatoryIAS/IFRS adoption improves thepredictability of cash flows andfuture earnings, the persistenceand the timeliness-IFRS earnings are not moreconservative than earnings basedon local GAAP regulation-nable to support systematicevidence that IFRS results enhanceearnings attributes quality formandatory adopters

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IASB and FASB issue new revenuerecognition standard — IFRS 15http://www.ey.com/Publication/vwLUAssets/EY-Devel80-Revenue-May2014/$FILE/EY-Devel80-Revenue-May2014.pdf

discussed the background, scope,effective date, the 5-step model andother guidance

Revenue recognition: finally, aStandard approach for allinvestor Perspectives—June 2014Patricia McConnellhttp://www.ifrs.org/Investor-resources/2014-Investor-Perspectives/Documents/Investor-Perspective-IFRS-15-June-2014.pdf

discussed changes, sectors mostlikely to be affected, and disclosurerequirements

Understanding earnings quality: Areview of the proxies, theirdeterminants and theirconsequences Patricia DechowWeili Ge Catherine SchrandSeptember 2009http://mitsloan.mit.edu/jae/pdf/Session_I_Dechow_Ge_Schrand.pdf

reviewed its proxies, determinantsand its consequencesmej mahaba siya 175 pages aboutearnings quality

Impacts on the constructionindustry of the new revenuestandardSeptember 2014http://www.kpmg.com/CN/en/IssuesAndInsights/ArticlesPublications/Newsletters/First-Impressions/Documents/First-Impressions-O-201409-Impacts-on-the-construction-industry-of-the-new-revenue-standard.pdf

-discussed about critical judgmentsat contract inception, contract lifecycle, and disclosures

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Earnings Quality Measures andExcess ReturnsPIETRO PEROTTI AND ALFREDWAGENHOFER

Journal of Business Finance &AccountingVolume 41, Issue 5-6, Article firstpublished online: 18 APR 2014http://onlinelibrary.wiley.com/doi/10.1111/jbfa.12071/pdf

examines how commonly usedearnings quality measures fulfill akey objective of financial reporting,i.e., improving decision usefulnessfor investors.

The sample consists of US non-financial firms drawn fromCompustat and CRSP overa 20-year period from 1988 to 2007

-stock-price-based measure forassessing the quality of earningsquality measures-calculate eight EQ measures

-negative association between thevalue of an earningsquality measure and the absolutevalue of excess returns-accruals measures, andparticularly accruals quality, arepreferable proxies for earningsquality

International Financial ReportingStandards and Earnings Quality:The Myth of Voluntary vs.Mandatory AdoptionNINA GUENTHERBERNHARD GEGENFURTNERCHRISTOPH KASERERANN-KRISTIN ACHLEITNERJune 2 2009http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1413145

revisit evidence whether incentivesor IFRS drive earnings qualitychanges, analyzing alarge sample of German firms in theperiod from 1998 to 2008

all German corporations whosecommonstock8 is listed in the CompositeGerman stock index (CDAX) -sample period starts in1998 as due to the KapAEGpublicly traded Germancorporations were allowed toprepareconsolidated financial statementsunder international accountingstandards (IFRS or USGAAP) instead of German GAAP(HGB) for the first time

-logistic regression to assess theimpact of ownership characteristicsonvoluntary IFRS adoption-analyze the impact of ownershipand firm characteristics on thetiming ofIFRS adoption using the binarylogistic regression-also used different measures toanalyze effect on earnings qulaity

voluntary and mandatory adoptersdiffer distinctively in terms ofessential firm characteristics andthat size, leverage, age, bankownership and ownershipconcentration influenced thedecision to voluntarily adopt IFRS.However, regardless of the decisionto voluntarily adopt IFRS,conditional conservatism increasedunder IFRS for both groups ofadopters, while evidence does notsuggest an increase in valuerelevance under IFRS.

SOFTWARE IFRS 15: REVENUEFROM CONTRACTS WITHCUSTOMERSBDOhttp://www.bdointernational.com/Services/Audit/IFRS/IFR-Bulletins-2011/IFRB%202014/2014%20006.pdf

discussed commercial effects andother issues regarding software

IFRS 15: Implementationchallenges 29 July 2014 ChristophCruss Partner, PwC Germanyhttp://www.pwc.ru/ru/events/2014/assets/2-gruss-eng.pdf

discussed Revenue Impacts theEntire Organization, Impact Studyof various Industries and Keyaspects to consider implementingIFRS 15

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How have the IAS/IFRS adoptionaffected earnings management inEU? The effect of theabsence/divergence of regulationand of legal enforcement.Alessandro Mechelli and RiccardoCimini. n.d.http://www.virtusinterpress.org/IMG/pdf/Riccardo_Cimini_Alessandro_Mechelli_paper.pdf. February 28,2015.

This paper aims to investigate theeffect produced by the adoption ofIAS/IFRS on earnings managementin European Union.

Independent: IFRS Adoption Dependent: Earnings Management

Spearman's rank correlationcoefficient

Standard Deviation

Median

They observed that the IAS/IFRSfirst-time adoption produceddifferent effects on earningsmanagement depending on thecountries analysed and the kind ofearnings management investigated.

Our findings also show a positiveand significant relation between thereduction of the earnings management and thelevel of the legal enforcement ofeach country.

The IFRS Adoption’s Effect onAccounting Quality in Sweden. MariPaananen. 2008.http://www.adoptifrs.org/uploads/Sweden/The%20IFRS%20%20Effect%20on%20Accounting%20Quality%20in%20Sweden.pdf. February28, 2015.

The paper studies whether thequality of financial reporting hasincreased in Sweden after theadoption of IFRS in 2005.

Independent Variable: IFRSAdoption Dependent Variable: AccountingQuality

Pearson correlation, earningssmoothing (they used Share Priceas measurement of AccountingQuality.)

Results suggest that there hasbeen no increase in financialreporting quality over the two firstyears after the adoption. On thecontrary, I find some indications ofa decrease in financial reportingquality measured as smoothing ofearnings, timely loss recognition,and value relevance.

The Impact of InternationalFinancial Reporting Standards(IFRS) Adoption on the AccountingQuality of Listed Companies inKenya. Erick Outa. 2011.http://www.macrothink.org/journal/index.php/ijafr/article/viewFile/1096/905. February 28, 2015

This study seeks to establish if theadoption of International FinancialReporting Standards (IFRS) inKenya has been associated withhigher accounting quality for listedcompanies.

Independent Variable: IFRSAdoption Dependent Variable: EarningsQuality

Earnings Management and STATA

Critiques of IFRS such as Barth etal. (2007:7) and Bartov et al.(2005:114) argue that there is noconclusive evidence that standardshave contributed to improvementsin accounting quality.

A closer look at the new revenuerecognition standard. 2014.http://www.ey.com/Publication/vwLUAssets/Applying_IFRS:_A_closer_look_at_the_new_revenue_recognition_standard_(June_2014)/$FILE/Applying-Rev-June2014.pdf.February 28, 2015.

Requirements for the new adoptionof IFRS15 (Implementation Guide)

Revenue Recognition AccountingStandards -- Scope, Evaluation ofImpact

---- ----

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New Revenue RecognitionAccounting Standard—Learningand Implementation Plan. 2015.http://www.aicpa.org/interestareas/frc/accountingfinancialreporting/revenuerecognition/downloadabledocuments/2014-09_liplan.pdf. February28, 2015.

Timeline for implementation guide. New Revenue Recognition Account ---- ----

Impact of Mandatory IFRS Adoptionon Conditional Conservatism inEurope. Andre, Filip, and Paugam.2013.

The paper studies the effect of themandatory adoption of IFRS inEurope in 2005 on conditionalconservatism.

Independent Variable: IFRSAdoption

Dependent: Conservatism

To capture conditionalconservatism, we use threemeasures: the Basu (1997)measure, the Khan and Watts(2009) measure, and a measurecontrolling for potential shifts inunconditional conservatism andcost of capital after the adoption ofIFRS.

Our results inform standard-settingstakeholders about a potentialnegative effect of the greaterflexibility permitted by IFRS on akey dimension of accountingquality. They are important forEuropean regulators and standardsetters as they review the cost andbenefits of IFRS.

Mandatory IFRS Adoption andAccounting Conservatism. Ke,Young. Zhuang. 2013.

An important point in their study isthat they avoid the commoncriticisms of the DT measure bycomparing the difference in the DTmeasure under local accountingstandards and IFRS for the samefirm in the same IFRS reconciliationyear.

Independent Variable: IFRSAdoption Dependent Variable: AccountingConservatism

Standard cross-sectionalregression model

For financial firms domiciled instrong legal enforcement countries,we find some weak evidence thatthe mandatory IFRS adoptionincreases the degree of accountingconservatism. In contrast, forfinancial firms domiciled in weaklegal enforcement countries, wefind that the mandatory IFRSadoption results in a decrease inaccounting conservatism.

Earnings quality in U.K. privatefirms: Comparative loss recognitiontimeliness. Mond Rahmat. 2013.

Their hypothesis is that private-company financial reportingnevertheless is lower quality due todifferent market demand, regulationnotwithstanding.

For our paper-->Earnings Quality Time-series, linear regression

Our principal result is that timelyloss recognition is substantially lessprevalent in private companies than in publiccompanies, despite the groupsfacing equivalent regulatory rules.

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The Effect of IFRS Adoption on theFinancial Reports of LocalGovernment Entities. Ahmed andAlam. 2012. AustralasianAccounting, Business and FinanceJournal Volume 6 | Issue 3.

This paper aims to analyse thechanges in accounting surplus(loss), equity and assets, andliabilities as a result of accountingpolicy changes from the AustralianAccounting Standards (AAS) to theInternational Financial ReportingStandards (IFRS) in Australian localgovernment entities.

Independent Variable: IFRSAdoption on Local GovernmentEntities

Using the reconciliation notesdisclosed by 117 local governmententities

The results show some differencesbetween two sets of accountsprepared under these differentaccounting standards. While theaverage surplus (loss) of localcouncils has decreased, theirequities, assets and liabilities haveincreased, with no major significantchanges in their overall financialposition, except for liabilities. Theseresults indicate the possibleconsequences of the adoption ofIFRS by local government entitiesin other countries on performanceindicators who have or are yet toimplement these standards.

Malta: New Rules For RevenueRecognition - What’s The ImpactOn Your Business? JonathanDingli. 2014.http://www.mondaq.com/x/329268/Accounting+Standards/New+rules+for+revenue+recognition+whats+the+impact+on+your+business.February 28, 2015.

It observes what would be theprobable impact of IFRS 15 to thebusiness.

Independent: IFRS15 adoption Dependent: Business in General -----

Entities may also need tocommunicate with investors andother stakeholders who will want tounderstand the impact of the newstandard on the overall business.Areas of interest may include theeffect on financial results, the costsof implementation, any proposedchanges to business practices, andthe transition approach selected.

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The impact of IFRS adoption on thevalue relevance of book value and earnings by Peter Clarkson et al

investigate the impact of IFRSadoption in Europe and Australia onthe relevance of book value and earnings forequity valuation.

price per share as at the BalanceSheet date; BVPS ; EPS

employ a ‘‘same firm year’’research design IFRS enhances comparability

The role of revenue recognition inperformance reporting by AlfredWagenhofera

examines revenue and profit or lossrecognition and how thesemeasures provide financialinformation about companies’performance

n/a n/a

striving for a conceptuallyconsistent standard is undesirablebecause the economiccharacteristics of earnings cyclesdiffer across firms and so does theusefulness of information.

Do accounting standards matter?An exploratory analysis of earningsmanagement before and after IFRSadoption

analyze the effect of the mandatoryintroduction of IFRS standards onearnings quality

income before extraordinary items(IBEX), total assets and sales

threshholds approach- test the‘‘loss avoidance threshold” byanalyzing the distribution of incomebefore extraordinary items

pervasiveness of earningsmanagement did not decline afterthe introduction of IFRS

Revenue Recognition, EarningsManagement, and EarningsInformativeness in theSemiconductor Industry

examines the implications ofrevenue recognition methods for asample of semiconductor firms; examines therevenue recognition methods ofsemiconductor firms and theirimplications for earnings management andearnings informativeness.

Sell-Through and Combo logistic regression model

earnings are more informative (the earnings-returns association isstronger) for firms that deferrevenue recognition until productsare resold to end-customers

Accounting complexity,misreporting,and the consequencesof misreporting

whether accounting complexity inthe area of revenue recognition increases the probability ofrestating reported revenue.

dependent variable is one if the firm restated revenueand zero if the firm restatedsomething other than revenue; Control variables fall intothree categories: (1) valuerelevance, (2) governance, and (3)other.

logistic regression model;restatement design and matched-sample design

revenue recognition complexity increases the probability ofrevenue restatements, and theserestatements are the result of both intentional andunintentional misreporting

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The Role of Revenue in FirmValuation

role of revenue in valuing firms-whether the ability of revenue to convey informationbeyond earnings is pervasive orlimited to situations where earnings are perceived tobe less informative

value relevance and informationcontent; sales, earnings, and stockprice data;

crosssectional regression model;tests of significance on the estimated coefficients arebased on the time-seriesdistribution

role of revenue in valuation ispervasive

Improving earnings quality: Theeffect of reporting incentives andaccounting standards

different effects on earnings qualityof accounting standards andreporting incentives for Germany

sample of consolidated statementsfrom companies listed in the German capitalmarket; data about stockperformance

OLS regressions

IFRS reporting potentiallydecreases earnings quality on average; but also thatreporting incentives appear to havelower effects on earnings quality inIFRS statements than in GGAAPstatements. Thus, IFRS may lead tomore homogenous earnings qualityacross firms.

The Effect of IFRS Adoption andInvestor Protection on EarningsQuality Around the World

examines the effects of mandatoryIFRS adoption and investorprotection on the quality of accounting earnings

Dependent variables-Earningsquality Independent variables- Investorprotection

discretionary accruals as themeasure of earnings quality;

results suggest that earnings quality increases formandatory IFRS adoption when acountry's investor protection regime provides stronger protection.

Earnings quality refers to the abilityof reported earnings to reflect thecompany's true earnings, as well asthe usefulness of reported earningsto predict future earnings. Earningsquality also refers to the stability,persistence, and lack of variabilityin reported earnings

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