Examination of Real Earnings Management Under IFRS: Cross Country Analysis For Legal Families

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Abstract

This study examines the shift for real earnings management (REM) in code and common law countries in regard to their development levels for the post IFRS period. The study sample is composed of fourteen countries for the period from 1997 to 2015. The results indicate for code law countries that the real earnings management (REM) substitutes accrual earnings management (AEM). The increase in development level for code law countries significantly decreases the accrual earnings management (AEM) and there is an incremental decrease for the post IFRS period. However, for code law countries development level and post IFRS have no significance on REM. For the common law countries, the evidence suggests that there is a complementary use of AEM and REM. The increase in development level has a decreasing effect on both AEM and REM while post IFRS has no effect.

Author

• Ibrahim Onur Oz, University of Hartford