Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/253303 
Authors: 
Year of Publication: 
2020
Citation: 
[Journal:] Global Business & Finance Review (GBFR) [ISSN:] 2384-1648 [Volume:] 25 [Issue:] 3 [Publisher:] People & Global Business Association (P&GBA) [Place:] Seoul [Year:] 2020 [Pages:] 19-33
Publisher: 
People & Global Business Association (P&GBA), Seoul
Abstract: 
Purpose: To empirically document the proposition "Comparability is the goal; consistency helps to achieve the goal" (IFRS Conceptual Framework 2.26), we investigate whether accounting changes affect financial statement comparability and whether income smoothing through accounting changes has different effects on financial statement comparability. Design/methodology/approach: We conduct pooled OLS regressions with standard errors corrected for both firm and year level clustering to test all the analyses.We also use the propensity score matching method to construct a sample with accounting changes (treatment sample) and a sample without accounting changes (control sample). Findings: We find evidence consistent with our hypotheses that accounting changes reduce financial statement comparability.We also find that income smoothing improves financial statement comparability, but income smoothing through accounting changes reduces financial statement comparability. Research limitations/implications: There is a small number of firms that made accounting changes, so it would be worthwhile for future research to analyse a larger sample with various types of accounting changes. Originality/value: The main contribution of the study is that we empirically document one aspect of the conceptual framework that consistency helps to improve comparability
Subjects: 
Consistency
Accounting changes
Comparability
Income smoothing
Conceptual framework
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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