This paper examines how capital market pressures and institutional factors shape firms' incentives to report earnings that reflect economic performance. To isolate the effects of reporting incentives, we exploit the fact that, within the European Union, privately held corporations face the same...

New accounting standards require firms to expense the costs of option-based compensation (OBC). Earlier research has documented that firms in the U.S. generally underreport the values of OBC by manipulating the model inputs used for valuation purposes. This paper examines the information on and...

This paper describes the role that accounting for deferred taxes has played in the ongoing financial crisis among the major Japanese banks, as dramatized most vividly by the recent collapse of Resona Bank. I argue that deferred tax accounting: (1) has been used by the Japanese Government,...

Financial Reporting Standard No 3 (FRS3) regulated the reporting of financial performance by UK firms from 1993 until the adoption of International Financial Reporting Standards in 2005. FRS3 outlawed extraordinary items, but allowed a clearer distinction between recurring and transitory income...

Accounting for stock options and executive remuneration have been one of the most debated and controversial issues in accounting regulation and corporate governance. The purpose of this study was to analyse the impact of the mandatory adoption of IFRS 2 for accounting of stock options in Italian...

Prior research documents that conditional conservatism, measured as the asymmetric timeliness of earnings reflecting bad versus good news, varies with cross-country differences in institutional regimes. In this paper, we examine the determinants of conditional conservatism and related earnings...

We examine how the transition from local GAAPs to IAS/IFRS of companies that are publicly traded on a European stock exchange affects earnings management. To measure earnings management we apply 15 different proxies. In analyzing 17 European countries and more than 18,000 firm-year observations...

Discount rate selection represents a centrally material factor impacting valuation models. Given the strong reliance on discounted cash flow modelling as a basis for determining an assets recoverable amount, the judgement exercised by reporting entities regarding rate selection is of paramount...

This paper assesses current regulatory and accounting developments in the OECD area against their purported goals. It specifically considers the different approaches to valuing pension liabilities and questions the possibility of convergence between funding and business accountants' valuation...

We complement recent research (Ball et al. 2003) which suggests that country-level incentives (i.e. legal origin and the level of capital market development) are the main determinants of the quality of financial reporting. Using a newly developed Brazilian Corporate Governance Index (BCGI) we...