Behind the veil of IFRS adoption by UK large private firms: determinants and earnings quality

Yu-Lin Hsu, Y. C. Yang, Y. H. Chiu

Research output: Contribution to conferencePaper

Abstract

This paper takes the opportunity of the introduction of New UK GAAP to explore large private firms’ accounting choices. We emphasize large private firms, which are important in economies but do not go public, and investigate their incentives behind the switch from UK GAAP to IFRS. Using data in 2014 and 2015, we show that firms that have foreign shareholders, Big4 auditors, or a major shareholder are more likely to adopt IFRS when facing this change. We also find larger or more leveraged firms have more incentives to switch to IFRS.
This research further examines companies’ earnings quality, and shows that while IFRS adopters involve in more accrual-based earnings management, they recognize loss more timely. This finding is consistent with financial accounting theory that there is no perfect accounting regulation. This research provides empirical evidence for accounting authorities to evaluate the use of New UK GAAP and IFRS by private firms and contributes to the current literature.
Original languageEnglish
Publication statusUnpublished - 2018
EventThe 2018 Annual Meeting of the American Accounting Association -
Duration: 4 Aug 20188 Aug 2018

Conference

ConferenceThe 2018 Annual Meeting of the American Accounting Association
Period4/08/188/08/18

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