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The effect of mandatory adoption of IFRS on the magnitude of accruals

Francisco Sánchez (Departamento de Administración, Facultad de Economía y Negocios, Universidad de Chile, Santiago, Chile)
Begoña Giner (Departamento de Contabilidad, Facultat d'Economia, Instituto de Economía Internacional, Universitat de València, Valencia, Spain)
Belén Gill-de-Albornoz Noguer (Departamento de Finanzas y Contabilidad, Facultad de Ciencias Jurídicas y Económicas, Universitat Jaume I, Castelló de la Plana, Spain)

Academia Revista Latinoamericana de Administración

ISSN: 1012-8255

Article publication date: 26 October 2021

Issue publication date: 14 February 2022




This paper investigates whether the greater flexibility of International Financial Reporting Standards (IFRS) in contrast to accounting models that were used before those standards became mandatory meant a significant change in the magnitude of accruals recognized in the accounting income.


18,126 observations are analyzed on 1,881 non-financial companies in 19 European countries in 2000–2012. A difference-in-differences regression method is used. The treatment sample includes companies that were required to adopt IFRS as from the 2005 fiscal year, while the control sample comprises companies that voluntarily adopted IFRS prior to 2005.


Compared to prior accounting standards, the mandatory adoption of IFRS increased the absolute value of accruals. This result is seen only in those companies where the magnitude of accruals is negative. The observed effect is independent of the degree of similarity between IFRS and prior standards.


This paper complements the literature analyzing the effect of IFRS on the financial statements and on the financial-economic indicators of companies. It analyzes the component of accounting income that is most sensitive to the use of professional judgment: accruals. Focusing on observed accruals helps avoid an error in measurement that can be made when working with the discretionary component of accruals. Additionally, a longer time horizon than in previous studies is considered.


Este trabajo investiga si la mayor flexibilidad de las Normas Internacionales de Información Financiera (NIIF) respecto a los modelos contables que se empleaban antes de que dichas normas fueran obligatorias supuso un cambio significativo de la magnitud de los ajustes por devengo reconocidos en el resultado contable.


Se analizan 18.126 observaciones de 1.881 empresas no financieras de 19 países europeos en 2000–2012. Se utiliza la metodología de regresión del tipo diferencia en diferencias. La muestra de tratamiento incluye empresas que adoptaron obligatoriamente las NIIF, lo que tuvo lugar en el ejercicio contable 2005, y la muestra de control está compuesta por empresas que las adoptaron voluntariamente antes de 2005.


Con respecto a las normas contables previas, la adopción obligatoria de las NIIF incrementó el valor absoluto de los ajustes por devengo. Este resultado se observa solamente en el grupo de empresas donde la magnitud de los devengos es negativa. El efecto observado es independiente del grado de similitud entre las NIIF y las normas previas.


Este trabajo complementa la literatura que analiza el efecto de las NIIF sobre los estados financieros y los indicadores económico-financieros de las empresas, analizando el componente del resultado contable más sensible al uso del juicio profesional: los devengos. El hecho de centrarse en los devengos observados permite evitar el error de medición en el que se incurre cuando se trabaja con el componente discrecional de los mismos. Adicionalmente, se analiza un horizonte temporal más amplio que en trabajos previos.



(*) This paper is the result of the doctoral thesis defended by Dr. Francisco Sánchez and directed by Dras. Giner and Gill-de-Albornoz. The authors are grateful for the comments received from the colleagues during the XVII Congress of Spanish Association of University Lecturers in Accounting (ASEPUC) held in June, 2016 in Bilbao, Spain; and during the XXXVI National Meetings of Faculties of Business Management and Economics (ENEFA) of Chile held virtually in November, 2020. In addition, Dr. Francisco Sánchez is grateful for the financial support during his doctoral studies to Becas Chile (CONICYT) and the Faculty of Economics and Business of the University of Chile.

The work was supported by Ministerio de Ciencia e Innovación, Madrid, Spain (grant numbers: PID2020-117792RA-I00 and PID2019-111143GB-C33) and Universitat Jaume I research project UJI-B2020-26.


Sánchez, F., Giner, B. and Gill-de-Albornoz Noguer, B. (2022), "The effect of mandatory adoption of IFRS on the magnitude of accruals", Academia Revista Latinoamericana de Administración, Vol. 35 No. 1, pp. 1-19.



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