Original scientific paper
https://doi.org/10.1080/1331677X.2020.1860793
Voluntary IFRS adoption and accounting quality: Evidence from Japan
Junjian Gu
Abstract
Accounting scholars have discussed the determinants of
International Financial Reporting Standards (IFRS) adoption and its
outcomes. However, little research focuses on the Asian countries
that voluntarily adopted IFRS on a limited basis. In this study, we
focus on a specific country, Japan, the largest nation worldwide
that allows voluntary IFRS adoption. According to expectancy theory, we predict that voluntary IFRS adoption with motivation similar to that of the International Accounting Standards Board can
improve accounting quality by enhancing motivation to adhere
to the IFRS guidelines, which increases financial reporting comparability. We find that voluntary IFRS adoption by Japanese firms
with positive motivation reduces income smoothing and enhances the extent of conditional conservatism. Additionally, we find
that these associations primarily exist in firms with higher leverage, banker investors, a higher degree of tax avoidance and in
regions with strong outside investor rights. Our main findings are
robust to several sensitivity tests. This study fills a gap in the
existing literature on IFRS adoption by investigating the effect of
voluntary IFRS adoption on accounting quality from an adoption
motivation perspective.
Keywords
Conditional conservatism; income smoothing; expectancy theory; voluntary IFRS adoption; Japan
Hrčak ID:
301269
URI
Publication date:
31.12.2021.
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