The Influences of Control Rights Deviation and Disclosure Transparency on the Strategic Early Adoption of SFAS 35 in Taiwan

• Main Authors: Zong-Cheng Chen, 陳宗呈
• Other Authors: Ching-Lung Chen
• Format: Others
• Language: zh-TW
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/86785402276931170057

碩士 === 朝陽科技大學 === 會計所 === 97 === The Financial Accounting Standards Board of Taiwan issued Financial Accounting Standards No. 35(SFAS 35) on July 1, 2004. This accounting standard was mandatory adoption on January 1, 2005 and allowed early adoption. SFAS 35 provides an even more interesting context for empirical examination in management’s motivation for the early adoption of the new standard. The paper explores early application of SFAS 35 affecting factors in two angles: Firstly, This study examines whether both the control rights deviation and the percentage of independent directors variables will trigger management’s choice of voluntarily early adoption SFAS 35. Secondly, inspired by the prior studies which showed information transparency would influence the behavior of financial reporting, this study further examines whether transparency ranking along with the choice of voluntarily early adoption SFAS 35. The empirical result indicates that firms with assets impairment showed a higher magnitude of earnings forecast errors and control rights deviation is significantly positive associated with the choice of voluntarily early adoption SFAS 35. Furthermore, the results also show that assets impairment recognized has significant positive association with the percentage of independent directors. Nevertheless, the three-way interaction of the control rights deviation, higher magnitude of earnings forecast errors and the percentage of independent directors present the negative correlation at the choice of early adoption SFAS 35. As for the influence of transparency ranking on the early adoption decision, it is found that the transparency ranking has significant negative associated with the choice of early adoption SFAS 35. It suggests that the more information transparency could reduce the possibility of early adoption SFAS 35.