The Role of Board Characteristics on the Relationship between International Financial Reporting Standards (IFRS) Adoption and Earnings Management: Evidence from China

Journal of Accounting and Taxation, Vol. 11(9), pp. 145-154, October-December 2019

10 Pages Posted: 13 Dec 2019

See all articles by Dr. Ahmad Alqatan

Dr. Ahmad Alqatan

Portsmouth Business school

Khaldoon Albitar

University of Portsmouth

Wei Huang

Zhongnan University of Economics and Law - School of Accounting

Date Written: September 25, 2019

Abstract

The purpose of this study is to investigate the effect of International Financial Reporting Standards (IFRS) adopting on earning management by considering the role of board size and board independence. Univariate tests and multivariate regression analysis were employed to test whether the level of earnings management is significantly lower after the adoption of IFRS and whether the role of board size and board independence on constraining the earnings managements is higher after IFRS adoption for a sample of Chinese listed companies during the period 2003 to 2013 except 2007 over a four-year period before and a six-year period after the adoption of IFRS. The empirical results show that earning management increased after the adoption of IFRS. However, there is no relationship between board size and earnings management before and after the adoption of IFRS but board independence has significantly decreased the earning management after the adoption of IFRS in China. The findings of this study have important implications for policymakers, auditors, multinational firms, and users of financial reports. As the rapid growth of China's economy gains global recognition, the Chinese stock market is capturing the attention of international investor.

Keywords: Earning management, International Financial Reporting Standards (IFRS), Board size, Board independence

Suggested Citation

Alqatan, Ahmad and Albitar, Khaldoon and Huang, Wei, The Role of Board Characteristics on the Relationship between International Financial Reporting Standards (IFRS) Adoption and Earnings Management: Evidence from China (September 25, 2019). Journal of Accounting and Taxation, Vol. 11(9), pp. 145-154, October-December 2019 , Available at SSRN: https://ssrn.com/abstract=3501962

Ahmad Alqatan (Contact Author)

Portsmouth Business school ( email )

Portsmouth, PO1 3DE
United Kingdom

Khaldoon Albitar

University of Portsmouth ( email )

University House
Winston Churchhill Avenue
Portsmouth, Hampshire PO1 2UP
United Kingdom

Wei Huang

Zhongnan University of Economics and Law - School of Accounting

182# Nanhu Avenue
Wuhan, 430073
China

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