The Effect of Convergence to IFRSs on Value-Relevance, Predictive Ability of Cash Flows, and Earnings Management

• Main Authors: Hsuan-Pin Wang, 王炫斌
• Other Authors: 顏信輝
• Format: Others
• Language: zh-TW
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/71951459006931939688

碩士 === 淡江大學 === 會計學系碩士班 === 98 === Adoption of IFRSs has become an essential trend of global accounting norm. This study uses data before during and after year 1999, which accounting standard in Taiwan started to converge with IFRS, then divides data into groups in order to examine possible affect resulted from this policy before Taiwan fully adopts IFRSs. First part, we bases our study on analysis of Collins, Maydew and Weiss (1997) , and uses value relevance of financial statement to analyze whether any alteration exists in investors drawing decision based on financial statement information; At the mean time we reference study of Kim and Kross (2005) and use financial statement information’s predictability on expected future cash flows to analyze predictability of financial statement information on firm performance. Our result shows that both value relevance and predictability on future cash flows has increased in statistical significance after Taiwan started convergence with IFRSs. This empirical study also finds that when firm’s goal is to avoid net loss, earnings management has increased significantly after convergence. Nevertheless, this study also finds that firm employs discretionary accruals to lower net profit subsequent to convergence. As to firms with high earnings management motivation, they are unlikely to employ discretionary accruals to affect earnings performance subsequent to convergence.