The Development of Accounting Quality of IAS and IFRS Over Time : The Case of Germany

We examine the characteristics of accounting numbers using a sample of German companies reporting under IAS (2000-2002), and IFRS (2003-2004) and (2005-2006). We investigate the change in accounting quality during these time periods as IASB revises and issues new standards. Contrary to expectations, we find that earnings and book value of equity are less value relevant during the IFRS periods than the IAS period. The findings on earnings smoothing and timely loss recognition corroborate the value relevance test. Our results suggest that firms in the IFRS periods manage earnings more and do not recognize losses in a timely manner as compared to the IAS period. These results are reasonably robust even when we remove new and less experienced adopters of IFRS