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This paper examines the effects of the IFRS adoption on earnings quality of 1245 Canadian firms.
The proposed changes to the Impairment model, in theory, have been welcomed, yet many operational challenges are inherent in the proposal with deliberations ongoing to clear these up.
These two phases of the replacement project have been found to be the most important to the local industry due to the majority of financial assets being held at amortised cost.
Finally, for the conjecture that IFRS adoption leads to higher earnings volatility for IFRS adopters than that of non-adopters, there is insufficient evidence to support this suggestion.
Purpose: The main objective of the study is to evaluate the expectations of the local banking industry as regards the proposed changes to financial instrument accounting.
The replies received are analysed and then compared to provide the full picture.
Findings: The study concludes that the changes issued so far through IFRS 9 are mainly aimed at making it easier for banks to conduct their business, with reporting mainly being limited to just that, with the removal of the tainting provisions as well as the reduction in the classifications for financial assets.Despite its significance and the increasing globalization of the world’s financial market, revenue recognition requirements prior to issuance of a new guidance in 2014 differed in US Generally Accepted Accounting Principles (“US GAAP”) from those in International Financial Reporting Standards (“IFRS”), at times resulting in different accounting for similar transactions.The FASB issued ASC 606, Revenue from Contracts with Customers, and ASC340-40 Other assets and Deferred Costs - Contracts with Customers, and the IAS issued IFRS 15, Revenue from Contracts with Customers (collectively, the “revenue standard”) in May 2014 along with consequential amendments to existing standards.Recognise revenue when the entity satisfies a PO Lastly, the standard’s implications could be wide ranging, affecting business strategies, processes, systems, controls, financial statement recognition, and disclosures.The dissertation will provide you even an analysis of potential impacts of the new standard on Italian Listed Companies’ Financial Statements.I find that earnings quality of Canadian firms, on average, improves following the adoption and the improvements are mostly driven not by U. adopters but by IFRS adopters, suggesting that IFRS has a positive impact on earnings quality.Partitioning the sample, I find that firms with incentives for transparent reporting have stable earnings quality throughout the sample period whereas firms without such incentives show an improvement in earnings quality following the adoption.Revenue is one of the most important financial statement measures to both prepares and users of financial statements and it is used to measure and assess aspects on an entity’s past financial performance, future prospects and financial health.Revenue recognition is therefore one of the accounting topics most scrutinized by investors and regulators.I also find that earnings quality declines to a greater degree for firms in extractive/high-litigation-risk industries relative to firms in non-extractive/low-litigation-risk industries.Further analyses reveal that (1) earnings quality seems to deteriorate for firms with intense reliance on fair value accounting after the adoption but not for firms with minimal reliance on fair value accounting, that (2) R&D intensive firms see some weak improvements in earnings quality following the adoption in comparison to non-R&D intensive firms, and that (3) IFRS adoption is associated with a greater improvement in earnings quality for loss firms than for profitable firms.