The Relationship between IFRS Adoption and Earnings Quality: Evidence from China

Abstract

We investigate the effect of International Financial Reporting Standards (IFRS) mandatory adoption on earnings quality, and how auditor type (Big 4 vs. non-Big 4) could moderate this relationship. Standard setters argue that IFRS adoption would lead to improving the accounting information quality. our findings suggest that IFRS adoption is associated with higher earnings quality (lower abnormal accruals). However, results do not provide evidence on the effect of the auditor type on this nexus. This study's findings are important to standard setters as they evaluate IFRS adoption.

Keywords: IFRS adoption; Earnings Quality; Audit Quality; China

DOI: 10.7176/RJFA/13-6-07

Publication date:March 31^st 2022