Browsing by Subject "IFRS"
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Item Does a common set of accounting standards affect tax-motivated income shifting for multinational firms?(2013-05) De Simone, Lisa Nicole; Mills, Lillian F.I examine an unintended consequence of countries permitting or requiring a common set of accounting standards for unconsolidated financial reporting. Specifically, I test whether adoption of IFRS facilitates income tax-motivated profit shifting by multinational entities (MNEs). MNEs often justify transfer prices to tax authorities by benchmarking intercompany profit allocations against a range of profit rates reported by economically comparable, independent firms that use similar accounting standards. A larger set of qualifying benchmark firms resulting from IFRS adoption could allow opportunistic managers to support more tax-advantaged transfer prices. I use a database of EU unconsolidated financial and ownership information to identify tax-motivated income shifting over 2001 to 2010. I estimate a statistically and economically significant 17.5 percent tax-motivated change in reported pre-tax profits following affiliate IFRS adoption, relative to no change in income shifting behavior for non-adopters. The magnitude of this effect increases in expansions to the set of potential benchmark firms upon affiliate IFRS adoption.Item International Financial Reporting Standards (IFRS) and the Institutional Environment: Their Joint Impact on Accounting Comparability(2012-10-19) Neel, Michael J.Comparability is a desirable qualitative characteristic of financial information and critical for financial statement users' ability to identify and understand similarities and differences in financial results among reporting entities. Yet, little research explicitly considers either the determinants or benefits of comparability because of difficulty in identifying and measuring the theoretical construct of comparability. Further, the widespread global adoption of IFRS, a relatively homogenous set of accounting standards, is expected to increase comparability among companies that operate in different national jurisdictions. However, prior studies that examine the average impact of mandatory IFRS adoption on comparability find mixed results. I hypothesized that the impact of mandatory IFRS adoption on comparability varies with managers' reporting incentives and differences between countries' domestic standards and IFRS. Using listed firms from 34 countries, I documented that comparability under non-IFRS domestic standards is higher in countries that provide strong reporting incentives (i.e. countries with strict enforcement regimes or high earnings transparency). Additionally, I found an increase in comparability following IFRS adoption (relative to a control sample of non-adopters) in countries that provide strong reporting incentives or with large domestic GAAP-IFRS differences. In contrast, I found evidence of a decrease following IFRS adoption (relative to a control sample of non-adopters) in countries with weak reporting incentives or with small domestic GAAP-IFRS differences. Finally, I showed that changes in comparability surrounding adoption are positively associated with changes in the quality of firms' information environments.