Institutional Factors and Earnings Management in the Asia-Pacific: Is IFRS Adoption Making a Difference?

We investigate whether variations in earnings management in the Asia-Pacific region countries can be explained by the extent of IFRS adoption having regard to the diversity of cultures across countries in the region and the degree of accounting standards enforcement. Across 17 key countries in the region, we find that IFRS convergence is associated with reduced levels of earnings management, particularly in recent years when IFRS has been increasingly adopted by publicly listed firms in the region. Nevertheless, the influence of cultural values and the degree of accounting standards enforcement remain significant and persistent institutional factors explaining international differences in earnings management.