IFRS Convergence and Earnings Management

ABSTRACT In this work, the extent of earnings management before and after IFRS convergence was examined. Board's characteristics (independent of board members, board size, ethnicity, and political influence) and company's characteristics (audit quality, foreign stock market listing, company size, leverage, profitability and growth) before and after IFRS convergence were also investigated. Meanwhile, the Kothari's discretionary accrual model was used to measure the extent of earnings management. Using a sample of 231 publicly listed Malaysian companies over the 2005-06 period, it was found that IFRS convergence reduced the extent of earnings management. However, board's characteristics variables did not show any significant difference before and after the IFRS convergence. As for company's characteristics, only company growth was found to have a statistically significant difference before and after the IFRS convergence