Impact Of Adopting IAS-IFRS On The Handling Of Accounting Data: The Case Of France

Abstract

In this article we look at the possible relation between the IAS-IFRS, which promotes a present value, and earnings management enhanced by the application of these standards. The aim of this paper is to analyse the impact of the adoption of IAS-IFRS standards on the earnings manipulation used by managers to manipulate their earnings and other accounting information in order to keep the same image in front of investors and shareholders.

We are expanding, to the French context, the problem of information content of the discretionary component of accounting income in connection with the application of IAS-IFRS since 2005.

On the basis of a sample of 96 firms-year observations, selected from France, that adopted the IAS-IFRS since 2005, we studied the relationship of association between accounting variables the impact of the use of IAS-IFRS on discretionary accruals. In other words, we tried to analyse the advantages and disadvantages of the adoption of IAS-IFRS.

The study results show that the manipulation of accounting information existed both before and after the adoption of IAS-IFRS. However, the application of IAS-IFRS accounting standards in France had less motivated managers to manipulate the accounting numbers to increase earnings. Infact, the degree of earnings management is higher before the adoption of IAS-IFRS (the manipulations were 22.06% of discretionary accruals after adoption of IAS-IFRS and 31.28% before).