Title: Earnings management and corporate governance related to mandatory IFRS adoption: evidence from French-listed firms

Authors: Hela Garrouch; Manel Hadriche; Abdelwehed Omri

Addresses: Higher Institute of Management, GEF-2A Lab, Tunis University, Tunis, Tunisia ' Higher Institute of Management, GEF-2A Lab, Tunis University, Tunis, Tunisia ' Higher Institute of Management, GEF-2A Lab, Tunis University, Tunis, Tunisia

Abstract: This study investigates how mandatory adoption of the new accounting standards and enforcement mechanisms such as Big 4 auditors and board independence influence earnings management. Based on a sample of 120 firms listed on the French stock exchange, we find that the mandatory adoption of IFRS does not affect managerial opportunism. In contrast with previous studies, our results show that the corporate governance mechanisms are not sufficiently strong to enforce the application of the IFRS standards in France. This can be due to the special characteristics of the French context known by the weak investors' protection rights even in the post-IFRS period. IFRS can be of high quality just if they are accompanied with some factors like efficient governance mechanisms and appropriate enforcement.

Keywords: earnings management; accruals; corporate governance; board of directors; audit quality; IFRS adoption; France; mandatory adoption; accounting standards; accounting standard adoption; enforcement mechanisms; financial reporting; managerial opportunism; investor protection.

DOI: 10.1504/IJMFA.2014.066402

International Journal of Managerial and Financial Accounting, 2014 Vol.6 No.4, pp.322 - 340

Available online: 18 Dec 2014 *

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