The Effect of Internal Control on Earnings Quality of The Firms Adopting IFRS
Date Issued
2011
Date
2011
Author(s)
Chiang, Chien-Jen
Abstract
The thesis addresses whether the quality of internal control over financial reporting is an important factor that can affect the effectiveness of IFRS adoption. As internal control is designed to provide reasonable assurance for reliability of financial information, I expect that IFRS adoption can help firms with effective internal control improve earnings quality more than firms with weak internal control. Using 2003-2008 ADR firms, I find that firms with good internal control over financial reporting can improve their earnings quality after they adopt IFRS. This results remain the same when I control for country-level and firm-level factors that can affect earnings quality. The results suggest that internal control is an important internal governance that can help increase earnings quality. This thesis also offers an important insight to firms that are currently adopting IFRS or will adopt IFRS (e.g. firms in Taiwan). Although IFRS is a financial reporting standard with high quality, it is difficult for firms to improve earnings quality by adopting IFRS, unless effective internal control over financial reporting can be enforced.
Subjects
Internal control
IFRS
ADR
earnings quality
Type
thesis
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ntu-100-R98722022-1.pdf
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