The Impact of IFRS Adoption on Accounting Conservatism in the European Union

Daniel Zeghal, Zouhour Lahmar


Purpose –The purpose of this study is to analyze mandatory IFRS adoption’s impact on accounting conservatism. Design/methodology/approachOur empirical study is conducted on a sample of 15 European countries, observed from the year 2000 to 2010. We analyze both conditional and unconditional conservatism, which we measured, respectively, by timely bad news recognition as compared to recognition of good news and discretionary accruals. FindingsThe results of the empirical study confirm a significant reduction of accounting conservatism in the IFRS adoption period. This reduction is affected by the accounting model prevailing in a particular country. Moreover, the study shows a reduction of the gap between the two accounting models in the post-IFRS adoption period. Practical implicationsThe results obtained would be relevant for many decision makers such as investors, standard setters, IASB, European Union countries as well as those wishing to adopt International Standards. Originality/value – Our study complements and enriches the existent literature about the impact of the International Standards adoption. It dresses an important issue in a relatively long period to better assess the impact of IFRS.

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Copyright (c) 2016 Daniel Zeghal, Zouhour Lahmar

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International Journal of Accounting and Financial Reporting  ISSN 2162-3082

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