Earnings management and corporate efficiency pre- and post-IFRS: evidence from Taiwanese listed electronics corporations
Journal of Applied Accounting Research
ISSN: 0967-5426
Article publication date: 24 October 2022
Issue publication date: 4 May 2023
Abstract
Purpose
This study aims to examine the relationships among International Financial Reporting Standards (IFRS) adoption, earnings management, and corporate efficiency.
Design/methodology/approach
First, the authors employ the epsilon-based measure (EBM) of the data envelopment analysis to measure the corporate performance of the Taiwanese electronics industry from 2011 to 2014. Second, the authors regress the IFRS adoption and earnings management on corporate efficiency.
Findings
The findings show that the corporate efficiency deteriorated after IFRS adoption. Although the regression analysis shows that the relationship between earnings management and corporate efficiency is significantly positive, the authors find that IFRS adoption is effective in unveiling earnings management. Moreover, IFRS adoption moderates the impact earnings management and corporate efficiency.
Research limitations/implications
This study provides reference for decision-makers in the application of accounting principles and in the understanding of the IFRS impact adoption.
Practical implications
IFRS adoption can either facilitate or limit the earnings management that would affect corporate efficiency significantly and help the electronics industry as well as investors to know the changes in accounting principles and their effects on corporate efficiency.
Originality/value
The authors use the EBM of efficiency model to measure corporate efficiency and employ the modified Jones model to measure earnings management.
Keywords
Acknowledgements
Authors would like to thank Universiti Malaysia Pahang, which financially supported this research (University Research Grant Scheme RDU223303).
Citation
Wang, W.-K., Lu, W.-M., Ting, I.W.K. and Siao, W.-Y. (2023), "Earnings management and corporate efficiency pre- and post-IFRS: evidence from Taiwanese listed electronics corporations", Journal of Applied Accounting Research, Vol. 24 No. 3, pp. 523-543. https://doi.org/10.1108/JAAR-03-2022-0067
Publisher
:Emerald Publishing Limited
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