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The Accrual Anomaly Under Different Accounting Standards – Lessons Learned from the German Experiment
Author(s) -
Kaserer Christoph,
Klingler Carmen
Publication year - 2008
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.1468-5957.2008.02089.x
Subject(s) - accrual , accounting , german , accounting information system , business , context (archaeology) , accounting standard , anomaly (physics) , corporate governance , financial accounting , international financial reporting standards , quality (philosophy) , empirical evidence , earnings , finance , archaeology , epistemology , biology , paleontology , philosophy , physics , history , condensed matter physics
Several studies document that investors systematically overreact to accrual‐based accounting information. We address the question to what extent this accrual anomaly is related to different accounting standards. We provide empirical evidence that the accrual anomaly is also present in Germany. However, this anomaly seems mainly to be driven by firms presenting their financial statements under IFRS or US‐GAAP, while the anomaly is unlikely to exist for those firms complying with German GAAP. It is argued that introducing true and fair view accounting, like IFRS, that relies on difficult‐to‐verify information, may not be suitable to improve accounting information quality in the context of a weak corporate governance system.