This study aims to examine the relationships among International Financial Reporting Standards (IFRS) adoption, earnings management, and corporate efficiency.
First, the authors employ the epsilon-based measure (EBM) of the data envelopment analysis to measure the corporate performance of the Taiwanese electronics industry from 2011 to 2014. Second, the authors regress the IFRS adoption and earnings management on corporate efficiency.
The findings show that the corporate efficiency deteriorated after IFRS adoption. Although the regression analysis shows that the relationship between earnings management and corporate efficiency is significantly positive, the authors find that IFRS adoption is effective in unveiling earnings management. Moreover, IFRS adoption moderates the impact earnings management and corporate efficiency.
This study provides reference for decision-makers in the application of accounting principles and in the understanding of the IFRS impact adoption.
IFRS adoption can either facilitate or limit the earnings management that would affect corporate efficiency significantly and help the electronics industry as well as investors to know the changes in accounting principles and their effects on corporate efficiency.
The authors use the EBM of efficiency model to measure corporate efficiency and employ the modified Jones model to measure earnings management.
