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The purpose of this paper is to examine how firms’ accounting quality affects bank loan contracting in seven emerging markets and whether these relationships are affected by borrowers’ governance standards.

The study sample period is 1999-2007 because the syndicated loan market was severely affected by the East Asian financial crisis of 1998 and the US financial crisis of 2008. The final sample includes 719 loan observations for 75 firms in seven emerging markets.

The authors find that syndicated lenders provide loans with more favorable terms such as larger amounts, longer maturity and lower interest spread to borrowers in emerging markets with higher accounting quality. The authors also find that the influences of accounting quality on syndicated loan contracting for borrowers in emerging markets exist only with higher country- and firm-level governance rankings. The results of this paper suggest that lenders place more value on accounting numbers generated by borrowers in emerging markets with stronger internal and country governance frameworks.

Overall, this research provides new insights about how accounting quality affects the contract design. Specifically, the extant literature has demonstrated the effects of accounting quality on financial contracts in developed countries (e.g. Bharath et al., 2008). The authors extend this analysis to borrowers in emerging markets and confirm a similar result. Most notably, the authors explore whether the relationship between accounting quality and syndicated loan contracts is influenced by borrowers’ country- and firm-level governance, and find that accounting quality matters only when accompanied by high-quality governance. This research provides new insights about how accounting quality and governance standards affect the terms of borrowing contracts in emerging markets.

To provide a view of quality in accounting education from the perspective of a critical stakeholder group – academic accountants. The identification of this view adds to the growing discussions around quality, and how it is assured in higher education.

Applying a framework for defining quality in higher education to an accounting context, a postal survey questionnaire was sent to academic accountants at 39 Australian universities to gather data about their views of quality in accounting education.

Academic accountants view quality, as currently defined and promoted in their immediate working environment, differently to their views about how quality should be defined and promoted. As a consequence, quality assurance and improvement systems may be currently designed to assure quality that is promoted in accounting education, rather than quality that ought to be promoted.

Using a postal survey to gather data on the complex issue of “quality” might not always provide the richness of data that may be collected during face‐to‐face survey interviews.

The findings of this study provide valuable input into the discussion around the design of quality assurance and improvement systems in higher education generally, and for accounting education specifically.

In the absence of any previous empirical research that has sought to identify these perceptions, the findings fill the gap in the literature by clearly identifying the views of quality in accounting education from a key stakeholder group – academic accountants.

The purpose of this paper is to discuss empirical research examining the impact of International Financial Reporting Standard (IFRS) adoption and board governance on the accounting quality, in terms of relevance and faithful representation.

The research uses a sample of 454 observations of publicly listed companies on the Indonesian Stock Exchange for the fiscal year that ends on December 31, 2008 through 2011. Relevance is measured by predictive value, whereas faithful representation is measured by absolute discretionary accrual as an inverse measure. Board governance is measured by the board of commissioner score whereas IFRS adoption is measured by the percentage of IFRS adopted. The data used in this study are obtained both from Indonesian Capital Market Directory, Indonesian Stock Exchange database, and from company annual reports.

This research found evidence of a positive association of IFRS adoption on the relevance of accounting information quality. With respect to faithful representation, this study proves a positive association after IFRS adoption. This research also found that board governance has a positive impact on accounting information quality after IFRS adoption both in relevance and faithful representation. This result is in line with investor’s expectations that fair value IFRS adoption enhances the relevance of accounting information.

This study provides further evidence on the effect of IFRS adoption and board of governance on accounting information quality using data from Indonesia. Moreover, this study measures and tests both dimensions of earnings quality which are relevance and faithful representation and portrays a complete story about the quality of earnings. This study uses the qualitative characteristics of accounting information as proxies for accounting quality, so that it enriches the accounting literature about the role of accounting standards in financial reporting quality.

This study aims to examine whether the adoption of International Financial Reporting Standards (IFRS) leads to accounting quality improvements in Egypt as a code-law country. In particular, the study examines earnings management, the construct often used to assess accounting quality.

The study compares earnings management practice for Egyptian listed companies before (2000-2006) and after (2007-2009) the adoption of IFRS.

The findings of the study reveal that accounting quality, as measured by earnings management, has decreased in post-adoption period compared to pre-adoption period. IFRS are set up to provide high-quality financial reporting. However, this cannot be achieved solely by a regulatory requirement to follow. The accounting system is a complementary component of the country’s overall institutional system. Institutional improvements did not simultaneously take place by the Egyptian government around the adoption of IFRS. The Egyptian government did not introduce a more effective enforcement system, mandatory corporate governance regulations, investor protection mechanisms and sufficient institutional knowledge of IFRS during that period. Thus, even if IFRS are higher quality standards, the institutional features of Egyptian market could eliminate any improvement in accounting quality arising from adopting IFRS.

The results of the study are consistent with prior research suggesting that the adoption of IFRS, which are generally perceived to be of higher quality than domestic standards, does not necessarily lead to higher accounting quality in code-law countries like Egypt. The overall results indicate that incentives dominate accounting standards in determining accounting quality in Egypt.

The main reason why countries adopt IFRS invariably is to improve accounting quality. It is, therefore, of interest to ascertain if this goal has been met, especially, in code-law countries such as Egypt.

The purpose of this paper is to examine the relationship between regional institution and accounting quality.

This study investigates whether and to what extent the convergence to International Financial Reporting Standards (IFRS) improves Chinese firms’ accounting quality. It also examines the role regional institutions play in this process. The focus is on two aspects of accounting quality: the accrual aggressiveness and the timely loss recognition. Specifically, the study tests: whether the convergence to IFRS significantly lowers the accrual aggressiveness proxied by the magnitude of discretionary accruals (DA); whether the convergence to IFRS significantly enhances the timely loss recognition proxied by the likelihood of reporting large negative net income; and whether the effects of convergence to IFRS on accounting quality vary with the quality of regional institutions.

The findings show that convergence to IFRS generally was accompanied by increases in DA and decreases in timely loss recognition for Chinese firms. Further analysis on the development of regional institutions reveals that both changes in accrual aggressiveness and timely loss recognition are more pronounced for firms located in regions with a lower level of development in the legal environment.

This study contributes to the accounting literature in several ways. First, it extends the accounting literature regarding institutional factors by examining the association between regional institutions and accounting quality. Second, by adopting a within-country setting, the study avoids such problems of cross-country comparisons as confounding factors caused by country-specific accounting rules and regulations, differences in infrastructure and culture, and other potential endogeneity problems (Chan et al., 2010). Third, the attention paid to the European and US application of IFRS overshadows the application and effects of IFRS in emerging markets. By examining China, the world largest emerging economy in the process of economic transition, this study sheds light on the effect of convergence to IFRS on accounting quality for emerging or transitional economies.

This study aims to investigate the differences in earnings quality of Malaysian companies after the adoption of IFRS‐based accounting standards named FRS.

It is hypothesize that under the new set of accounting standards, the quality of earnings reported by these companies is relatively higher. Specifically, the study tests whether the level of earnings management is significantly lower after the adoption of IFRS, and reported earnings is more value relevant during the IFRS period. This study uses a large sample of 4,010 observations over a three‐year period before and a three‐year period after the adoption of the new set of accounting standards.

The results show that IFRS adoption is associated with higher quality of reported earnings. It is found that earnings reported during the period after the adoption of IFRS is associated with lower earnings management and higher value relevant.

The results of this study contribute additional evidence to the literature on earnings quality and the impact of IFRS adoption. As most of the existing studies on earnings quality and IFRS have been conducted on data from the U.S and European countries, this study fills a gap in the existing literature by studying the effect of adoption of IFRS on earnings quality in an emerging market.

The purpose of this paper is to examine whether a negative outcome (i.e. a sanction) of an inspection by Korea’s Financial Supervisory Service for an industry-leading company affects the accounting quality of other companies in the same industry. The premise is that when peer companies observe the negative results of such an inspection on a leader in their industry, they will be more concerned about their own risk during a future inspection and more likely to increase their accounting quality.

The authors conduct a mutivariate Oridnary Least Squares (OLS) regression using 11,476 South Korean samples from 2002 to 2016. The study uses ordinary least square regressions to test the hypotheses using discretionary accruals as a proxy for accounting quality.

The authors find that peer companies reduced their discretionary accruals in the next period and that this reduction is amplified according to the severity of the disciplinary action on the industry leader and the materiality of errors in that leader’s financial statements.

This finding contributes to the literature by providing the first evidence of a spillover effect of regulatory inspection on accounting quality that financial reporting sanctions not only affect the overall accounting quality of the sanctioned company but also that of its peers in the same industry. The authors expect this study to lead to future research on the effect of other regulations on industry-wide accounting quality.

The purpose of this paper is to examine the effect of audit quality on the value relevance of earnings and book value. Because joint audit is mandated for all Kuwait Stock Exchange-listed firms, it is hypothesized that the higher the quality of the audit team (as measured by the number of Big 4 audit firms in the joint audit team), the higher the value relevance of earnings and book values for equity valuation.

Consistent with prior research, the value relevance of earnings and book value is measured by the adjusted R² derived from the Ohlson’s 1995 regression model. The number of Big 4 audit firms represented on the firm’s audit team is used as a proxy for audit quality. Three tiers of audit quality exist, namely, two non-Big 4 audit firms, one Big 4 and one non-Big 4 audit firms or two Big 4 audit firms. To address this paper’s objective, the association between audit quality and the value relevance of earnings and book value were examined using four approaches. The final sample consists of 1,836 firm-year observations and covers fiscal years from a 12-year period (2002-2013).

Taken together, the four approaches used collectively provide empirical evidence that audit quality positively and significantly affects the value relevance of accounting measures to market participants. Importantly, the results reveal significant variations in the value relevance of earnings and book value jointly across the three possible auditor combinations.

Although using auditor size as a proxy for audit quality is well established in the auditing literature, a limitation of that proxy is that it measures audit quality dichotomously, which implicitly assumes a homogeneous level of audit quality within each group.

The findings show the importance of high-quality and rigorous external audits in improving the value relevance of accounting information.

This study contributes to the extent literature on audit quality by exploring the role of audit quality in a unique institutional setting that imposes mandatory joint audits. Although prior studies have investigated the effect of joint audit pair choice on earnings management and audit fee premium, this study is the first to investigate the effect of joint audit pair choice on the value relevance of accounting information.

The purpose of this paper is to investigate the relationship between related party transactions (RPTs) and accounting quality for the firms listed on the Athens Stock Exchange.

This paper compares accounting quality across two groups of firms. The first group contains firms that conduct material RPTs and the second group contains firms that do not conduct material RPTs. Accounting quality is measured using different proxies of earnings management. Four earnings management proxies are used, three metrics for earnings smoothing and one for managing earnings towards a target.

The results of the current study do not suggest that firms with significant RPTs exhibit less accounting quality compared to non-RPTs firms.

The results support the argument that RPTs are conventional transactions that are mainly conducted for business purposes.

This paper contributes to the literature by examining the effect of RPTs on accounting quality in Greece and whether firms that conduct RPTs exhibit less accounting quality or not.

The purpose of this paper is to provide empirical evidence regarding the classification of European countries based on accounting quality metrics. The authors investigate whether the grouping of countries based on accounting quality levels differs from other classifications based on accounting practices or country-specific factors identified in previous studies.

The authors run panel data regressions for 2.078 European listed companies using value relevance and earnings smoothing metrics. The authors also apply cluster analysis to classify the countries.

The results suggest that the adoption of a common set of International Financial Reporting Standards (IFRS) did not lead to a similar level of accounting quality of financial information. The authors identified three clusters of countries that are not coincident with previous classifications.

The results show that the adoption of different accounting practices allowed in IFRS does not necessarily influence accounting quality.

The results suggest that the way regulators decided to incorporate IFRS into national accounting systems is one issue that may be relevant in explaining the three clusters.

The paper provides empirical evidence that supports two theoretical assertions. The first is that a classification depends entirely on the characteristics used to represent the countries being classified. The second is that the adoption of a single set of accounting standards does not determine similar accounting practices and does not lead to similar levels of accounting quality.