Quotation Novotny-Farkas, Zoltán. 2018. IFRS, Firm-Level Reporting Incentives, and Financial Reporting Quality: Evidence from Private Firms (2018), with Moritz Bassemir. Journal of Business Finance and Accounting. 45 (7-8), 759-796.




This study examines financial reporting quality (FRQ) effects around voluntary International Financial Reporting Standards (IFRS) adoptions by German private firms across two important dimensions, earnings quality and disclosure practices. To capture differences in the motivations for IFRS adoptions, we identify four different types of IFRS adopting firms based on a comprehensive set of firm characteristics. We observe earnings quality improvements around IFRS adoptions primarily for one type of firm, which is young, fast growing and seeking access to public equity markets. Using a matched sample of private German GAAP and IFRS reporting firms, we find some evidence suggesting that IFRS also contribute to higher earnings quality. Recognizing that our earnings quality metrics are only incomplete measures of FRQ, we also compare the disclosure practices of IFRS and German GAAP firms. We find that all IFRS firm types disclose significantly more information in their financial reports and show a higher propensity to publish their financial reports voluntarily on the corporate website. Our findings indicate that failure to identify earnings quality changes around IFRS adoption cannot be automatically interpreted as IFRS adoption having no effect on the FRQ of (private) firms. Collectively, our results suggest that both incentives and accounting standards shape private firms’ FRQ.


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Publication's profile

Status of publication Published
Affiliation External
Type of publication Journal article
Journal Journal of Business Finance and Accounting
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, STRAT-B, VW-D, WH-B
Language English
Title IFRS, Firm-Level Reporting Incentives, and Financial Reporting Quality: Evidence from Private Firms (2018), with Moritz Bassemir
Volume 45
Number 7-8
Year 2018
Page from 759
Page to 796
Reviewed? Y
DOI https://doi.org/10.1111/jbfa.12315
Open Access N


Novotny-Farkas, Zoltán (Details)
International Accounting Group AB (Details)
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