Effects of IFRS Adoption on Tax-induced Incentives for Financial Earnings Management: Evidence from Greece

We investigate whether the adoption of International Financial Reporting Standards (IFRS) in Greece affected tax-induced incentives for financial earnings management. Prior to the implementation of IFRS, there were powerful incentives for firms facing higher tax pressure to restrict (exacerbate) upw...

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Bibliographic Details
Published inThe International journal of accounting Vol. 48; no. 2; pp. 218 - 247
Main Authors Karampinis, Nikolaos I., Hevas, Dimosthenis L.
Format Journal Article
LanguageEnglish
Published Urbana Elsevier Inc 01.06.2013
World Scientific Publishing Co. Pte., Ltd
Subjects
Accounting policies procedures
Accruals
Book–tax conformity
Capital debt management
Earnings management
Eastern Europe
Experiment/theoretical treatment
Financial management
Greece
IFRS adoption
Institutional taxation
International Accounting Standards Board
International Financial Reporting Standards
Studies
Tax incentives
Greece
IFRS adoption
Greece
Earnings management
M41
Book–tax conformity
H26
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Summary:We investigate whether the adoption of International Financial Reporting Standards (IFRS) in Greece affected tax-induced incentives for financial earnings management. Prior to the implementation of IFRS, there were powerful incentives for firms facing higher tax pressure to restrict (exacerbate) upward (downward) financial earnings management due to direct tax implications. IFRS adoption reduced book–tax conformity, thereby releasing financial income from tax implications. As expected, we find that tax pressure is a significant negative determinant of discretionary accruals in the pre-IFRS period. However, this effect dissipates under the new IFRS regime.
Bibliography:ObjectType-Article-1
SourceType-Scholarly Journals-1
ObjectType-Feature-2
content type line 23
ISSN:1094-4060
0020-7063
2213-3933
DOI:10.1016/j.intacc.2013.04.003