Effects of IFRS adoption on tax-induced incentives for financial earnings management: Evidence from Greece

Nikolaos I. Karampinis, Dimosthenis L. Hevas

    Research output: Contribution to journalArticlepeer-review

    Abstract

    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.

    Original languageEnglish
    Pages (from-to)218-247
    Number of pages30
    JournalInternational Journal of Accounting
    Volume48
    Issue number2
    DOIs
    Publication statusPublished - Jun 2013

    Keywords

    • Book-tax conformity
    • Earnings management
    • Greece
    • IFRS adoption

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