The impact of IFRS 15 on revenue and earnings quality: evidence from China

作者：Jerry W. Chen · 发表于：Asian Review of Accounting · 年份：2024 · DOI：10.1108/ara-07-2024-0220 · 被引用次数：5

PurposeThis study examines the impact of the International Financial Reporting Standard (IFRS) 15 on revenue and earnings quality in China.Design/methodology/approachThis study employs a difference-in-differences design with a treatment group and a control group, both listed in stock exchanges in China from 2015 to 2019. Entropy balancing is employed to mitigate any imbalanced distribution effects caused by the inherent difference within our sample.FindingsThis study reveals an enhancement in the quality of revenue and earnings accruals after implementing IFRS 15 in China. However, adopters tend to engage in more real earnings management, and their revenue and earnings exhibit less persistence. Additional analysis shows that the new revenue standard substitutes for firm-level control factors in shaping the trade-off between accrual-based and real earnings management in jurisdictions with weak legal enforcement.Research limitations/implicationsThis study focuses on the staggered implementation of IFRS 15 in the Chinese setting; hence, the findings of this study might not be generalised to other countries.Practical implicationsThe findings of this study will be of interest to investors, given its focus on the revenue and earnings quality of companies that have adopted IFRS 15. Additionally, it holds implications for standard-setting organisations, particularly regarding post-implementation reviews, to comprehend how managers adjust their earnings management strategies in respon...