Impact of Mandatory Application of International Accounting and Financial Reporting Standards on the Earnings Management Practices of Jordanian Corporations

(Nedal Omar Zaloom)

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Abstract

The research aims to identify the effect of the compulsory implementation of the international accounting and financial reporting standards (IFRS) on earnings management, e.g. the effect of negative earnings, leverage, growth rate and the accounting conservatism on corporations management profits. In order to achieve the study objectives, content analysis is utilized by designing a specific index that is prepared to measure the extent of corporations’ compliance with IFRS. The study sample consists of 102 Jordanian companies. To test the hypotheses of the study, descriptive statistics are utilized, and technical logistic regression is applied to clarify the effect of accounting standards, international financial reporting, negative earnings, leverage, growth rate and accounting conservatism on corporations earnings management. The study shows the lack of corporations’ full compliance with international accounting and financial reporting standards. The results of the study also shows that the factors of financial leverage and negative earnings positively affect corporations earnings management. Furthermore, the study does not find any significant impact for growth rate and conservatism factors on corporations’ earnings management. KEYWORDS accounting conservatism, IFRS, leverage, logistic regression, negative earnings
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References

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