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Title: Studies on the importance of incentives and standards in the financial reporting process
Author: Kosi, Urska
ISNI:       0000 0004 2721 6282
Awarding Body: Lancaster University
Current Institution: Lancaster University
Date of Award: 2010
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This thesis consists of three self-contained studies on the factors affecting the financial reporting process. The first study investigates the role of reporting incentives in private firms. I observe significant decrease in asset -write-offs after an adverse change in tax treatment of write-offs. This change does not affect any other economic incentive to use accounting discretion and thus permits me to disentangle the tax- minimisation incentive from other incentives including debt contracting, dividends and employee relations that cause the anomalous positive relation between write-offs and profitability. I provide new and complementary evidence that tax incentives play an important role in firms' financial reporting behaviour. The second study examines whether mandatory adoption of IFRS affects the source and cost of debt financing. First, I find that mandatory IFRS adopters more likely issue public debt. Second, I show that IFRS adopters pay lower bond yield spreads but there is no significant effect on loan spreads. My findings are consistent with IFRS enhancing the quality and comparability of accounting information, and suggest that mandatory IFRS adoption is beneficial primarily for bond investors. Finally, I find that the positive effects of IFRS are present only in countries with strong institutions and less harmonised accounting standards. The third study investigates whether mandatory IFRS adoption affects credit relevance of accounting information. First, I find significant increase in credit relevance of mandatory IFRS adopters after the adoption. Second, I show that increase in credit relevance after IFRS adoption is greater for IFRS firms than for matched US \ \ firms, Third, I find that IFRS firms exhibit relatively higher credit relevance compared to US firms in the post-adoption period. Additionally, I show that IFRS effects vary between countries. I interpret higher credit relevance of IFRS-based accounting information relative to local standards as an increase in accounting quality from the debtholders' perspective. '.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available