Journal of
Accounting and Taxation

  • Abbreviation: J. Account. Taxation
  • Language: English
  • ISSN: 2141-6664
  • DOI: 10.5897/JAT
  • Start Year: 2009
  • Published Articles: 123

Full Length Research Paper

The role of board characteristics on the relationship between International Financial Reporting Standards (IFRS) adoption and earnings management: Evidence from China

Khaldoon Albitar
  • Khaldoon Albitar
  • Department of Accounting and Financial Management, School of Business, University of Portsmouth, UK.
  • Google Scholar
Ahmad Alqatan
  • Ahmad Alqatan
  • Department of Accounting and Financial Management, School of Business, University of Portsmouth, UK.
  • Google Scholar
Wei Huang
  • Wei Huang
  • Department of Accounting, School of Accounting, Zhongnan University of Economics and Law, Wuhan, China.
  • Google Scholar


  •  Received: 21 August 2019
  •  Accepted: 25 September 2019
  •  Published: 31 October 2019

Abstract

The purpose of this study is to investigate the effect of International Financial Reporting Standards (IFRS) adopting on earning management by considering the role of board size and board independence. Univariate tests and multivariate regression analysis were employed to test whether the level of earnings management is significantly lower after the adoption of IFRS and whether the role of board size and board independence on constraining the earnings managements is higher after IFRS adoption for a sample of Chinese listed companies during the period 2003 to 2013 except 2007 over a four-year period before and a six-year period after the adoption of IFRS. The empirical results show that earning management increased after the adoption of IFRS. However, there is no relationship between board size and earnings management before and after the adoption of IFRS but board independence has significantly decreased the earning management after the adoption of IFRS in China. The findings of this study have important implications for policymakers, auditors, multinational firms, and users of financial reports. As the rapid growth of China's economy gains global recognition, the Chinese stock market is capturing the attention of international investor.

 

Key words: Earning management, International Financial Reporting Standards (IFRS), board size, board independence.