TY - JOUR
T1 - Effects of IFRS adoption on tax-induced incentives for financial earnings management
T2 - Evidence from Greece
AU - Karampinis, Nikolaos I.
AU - Hevas, Dimosthenis L.
PY - 2013/6
Y1 - 2013/6
N2 - We investigate whether the adoption of International Financial Reporting Standards (IFRS) in Greece affected tax-induced incentives for financial earnings management. Prior to the implementation of IFRS, there were powerful incentives for firms facing higher tax pressure to restrict (exacerbate) upward (downward) financial earnings management due to direct tax implications. IFRS adoption reduced book-tax conformity, thereby releasing financial income from tax implications. As expected, we find that tax pressure is a significant negative determinant of discretionary accruals in the pre-IFRS period. However, this effect dissipates under the new IFRS regime.
AB - We investigate whether the adoption of International Financial Reporting Standards (IFRS) in Greece affected tax-induced incentives for financial earnings management. Prior to the implementation of IFRS, there were powerful incentives for firms facing higher tax pressure to restrict (exacerbate) upward (downward) financial earnings management due to direct tax implications. IFRS adoption reduced book-tax conformity, thereby releasing financial income from tax implications. As expected, we find that tax pressure is a significant negative determinant of discretionary accruals in the pre-IFRS period. However, this effect dissipates under the new IFRS regime.
KW - Book-tax conformity
KW - Earnings management
KW - Greece
KW - IFRS adoption
UR - http://www.scopus.com/inward/record.url?scp=84878194424&partnerID=8YFLogxK
U2 - 10.1016/j.intacc.2013.04.003
DO - 10.1016/j.intacc.2013.04.003
M3 - Article
AN - SCOPUS:84878194424
SN - 0020-7063
VL - 48
SP - 218
EP - 247
JO - International Journal of Accounting
JF - International Journal of Accounting
IS - 2
ER -