IFRS convergence and earnings management in India: a mixed method approach

Document Type

Article

Source of Publication

International Journal of Accounting Auditing and Performance Evaluation

Publication Date

9-2-2025

Abstract

This paper uses a mixed method to address the impact of International Financial Reporting Standards (IFRS) convergence on earning management in India. We examine a sample of 70 Indian listed companies with net worth exceeding 500 crore INR that adopted IND(AS) in Phase 1 in 2016. The Modified Jones Model is employed to assess earnings management over four years–two years pre- and post-IND(AS) adoption. Additionally, we conducted six semi-structured interviews with auditors and accountants. Contrary to the hypothesis of improved reporting quality through IFRS harmonisation and reduced principal-principal agency conflict, our findings reveal increased earnings management practices post-IND(AS) adoption. The complementary quantitative and qualitative results highlight India’s power imbalance, enabling large firms with tight controls to influence reporting practices, potentially indicating principal-principal conflicts between majority and minority shareholders. This research suggests implementing additional measures to safeguard minority shareholders’ interests from expropriation by the majority.

ISSN

1740-8008

Publisher

Inderscience Publishers

Volume

21

Issue

3-4

First Page

603

Last Page

628

Disciplines

Business

Keywords

convergence, corporate governance, earnings management, IFRS, International Financial Reporting Standards, reporting quality

Scopus ID

105015517773

Indexed in Scopus

yes

Open Access

no

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