Impact of credit rating downgrades and tightness of accounting standards on earnings management in listed SMES
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Author(s)Ying Zhee LimLink to ORCID Index: https://orcid.org/0000-0003-4360-1669
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Anna Azriati Che AzmiLink to ORCID Index: https://orcid.org/0000-0002-1361-340X
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Tuan Hock NgLink to ORCID Index: https://orcid.org/0000-0001-9578-1628
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DOIhttp://dx.doi.org/10.21511/imfi.21(3).2024.04
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Article InfoVolume 21 2024, Issue #3, pp. 40-50
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Creative Commons Attribution 4.0 International License
Due to its nature, funding remains the main problem for listed small and medium-sized enterprises (SMEs) globally. To overcome such a problem, there is a trend of using credit rating as the benchmark to appraise funding opportunities and applications in listed SMEs. As credit rating levels vary across time, subject to the performance of the listed SMEs, changes in the credit rating levels might trigger attention from listed SMEs, and actions might then be taken by the management to ensure that the credit rating is at the desired level. Since the literature in this strand of study is limited, this study aimed to examine the effect of credit rating downgrade and tightness of accounting standards on earnings management in listed SMEs. Employing a 2x3 between-subjects experiment manipulating credit rating downgrades (category or notch) and tightness of accounting standards (less tight, moderately tight, tight), it is evidenced that credit rating downgrades, especially notch downgrades, lead to more earnings management behaviors in the presence of a tight and less tight set of accounting standards. Different classifications of credit rating downgrades – notches and categories – will have different implications for earnings management based on the extent to which they are subject to external monitoring. As a practical matter, it is recommended that regulators exercise equal monitoring regardless of whether credit rating downgrades occur by category or notch.
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JEL Classification (Paper profile tab)G24, M41, M48
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References54
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Tables1
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Figures1
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- Figure 1. Interactive graph
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- Table 1. Descriptive and univariate analyses
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IFRS convergence: opportunities and challenges in India
Accounting and Financial Control Volume 1, 2017 Issue #2 pp. 13-18 Views: 3801 Downloads: 1718 TO CITEPast decade has witnessed several changes in the process of conduct of business activities across the world especially due to the wave of globalization. It has also made drastic changes in the process of financial reporting, in particular the continuing adoption of IFRS (International Financial Reporting Standards) worldwide. IFRS are high quality, understandable, enforceable and globally acceptable accounting standards issued by IASB (International Accounting Standard Board). Thus these are a set of international accounting standards stating how a particular type of transaction and other events should be reported in the financial statements. Thus IFRS are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. IFRS is becoming the global language of business with over 40% of the world adopting this as their standard for reporting. India also decided to converge to IFRS from 1st April 2016 in a phased manner, which in turn improves the financial statement comparability and transparency that helps to attract greater cross border investments. This paper focuses on the convergence of IFRS with Indian Accounting Standards, its utility, issues and challenges faced by the stakeholders. It also throws light to the ways through which problems can be addressed.
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Problem aspects of transformation in financial reporting of business entities in Ukraine
Fedir Zhuravka
doi: hhttps://doi.org/10.21511/gg.01(1).2017.05
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IFRS adoption and earnings predictability: evidence from listed banks in Nigeria
Uwalomwa Uwuigbe ,
Agba Love Uyoyoghene ,
Jimoh Jafaru ,
Olubukola Ranti Uwuigbe ,
Rehimetu Jimoh
doi: http://dx.doi.org/10.21511/bbs.12(1-1).2017.10
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