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The effects of accounting standards on the financial reporting properties of private firms: evidence from the German Accounting Law Modernization Act

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  • Julia Zicke

    (SAP SE)

  • Florian Kiy

    (Goethe-University Frankfurt am Main)

Abstract

This study investigates whether the 2009 German Accounting Law Modernization Act has affected the reporting and accounting practices of German private firms. In reforming German accounting standards, numerous accounting options were deleted, several accounting rules were transferred from IFRS to German GAAP with some modifications, and disclosure requirements were extended. In our analysis, we examine the changes in financial reporting and their effects on disclosures. We use four financial reporting property measures: discretionary accruals, the correlation between operating cash flow and accruals, the persistence of earnings, and the predictability of earnings. The results reveal no change across all financial reporting properties. Examining disclosure compliance for capitalized development costs and other provisions reveals substantial variation in compliance.

Suggested Citation

  • Julia Zicke & Florian Kiy, 2017. "The effects of accounting standards on the financial reporting properties of private firms: evidence from the German Accounting Law Modernization Act," Business Research, Springer;German Academic Association for Business Research, vol. 10(2), pages 215-248, October.
    • Handle: RePEc:spr:busres:v:10:y:2017:i:2:d:10.1007_s40685-017-0051-1
    DOI: 10.1007/s40685-017-0051-1
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    References listed on IDEAS

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    Cited by:

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    2. Florian Kiy & Theresa Zick, 2020. "Effects of declining bank health on borrowers’ earnings quality: evidence from the European sovereign debt crisis," Journal of Business Economics, Springer, vol. 90(4), pages 615-673, May.

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