Abstract
This study examines the differences between the accounting quality (value relevance, timely loss recognition, earnings persistence and earnings management) during pre and post-mandatory IFRS adoption periods in Jordan. Data covering fifteen years (2001-2003) as pre-IFRS adoption and 2004-2015 as post-IFRS adoption) was collected via annual reports of the listed industrial and service sector firms on the Amman Stock Exchange (ASE). The findings show that there is no change in the value relevance of earnings pre and post-IFRS adoption based on the price model, whereas value relevance of book value of equity has reduced after the IFRS adoption. The earnings are more value relevant as per the return model after the IFRS adoption. Timely loss recognition is significantly lower after the adoption of IFRS. Earning persistence is increased after the IFRS adoption and finally, earnings management is lower for the Jordanian firms after the adoption of IFRS. In addition, these findings signify that IFRS adoption have not improved accounting quality in Jordan. This study contributes to the body of knowledge regarding IFRS and accounting information quality in the developing country’s context i.e. Jordan and provides a specific guidance for Jordanian regulators to make the IFRS adoption helpful for firms and investors.
Keywords
- IFRS adoption in Jordan
- Value relevance
- Timely loss recognition
- Earnings persistence
- Earnings management