DOES EARNINGS MANAGEMENT CHANGE AFTER THE ADOPTION OF THE IFRS? EVIDENCE FROM ROMANIA

Abstract

Once that International Financial Reporting Standards are used for individual financial reporting, we expect that companies are going to achieve an increase in the financial reporting due to a higher degree of transparency. The present research tries to emphasize if there is any significant difference between the value of earnings management computed by using the national and the international accounting measures. The research is conducted on Romanian capital market, into the listed companies. The results of the research are mixed. While an improvement in the variability of net profit is observed (both for individual and bootstrapping with replacement analysis), the correlation between accruals and cash flow from operation is more negative (using both estimations techniques). The results on the differences of cash flow from operations also show an increase in the value of earnings management.

Keywords

• financial performance
• international accounting regulation
• romanian accounting standards