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The Effect of Harmonization to International Financial Reporting Standards on the Quality of Earnings – The Case of Argentina
Wanda M Mattei,
University of Puerto Rico - Rio Piedras
ABSTRACT. This paper investigates the effect of harmonization to the International Reporting Standards (IFRS), on the quality for accounting earnings in an emerging market, Argentina. A harmonization process to IFRS resulted in eight changes to local standards in 1997. This paper compares quality of earnings, as defined and measured by Basu (1997), timeliness and conservatism, before and after the implementation of the changes. The results indicate a significant increase in both timeliness and conservatism after the harmonization process. These findings seem to indicate that a private sector-led accounting regime is more appropriate for emerging economies. The findings also provide support for BKR’s (2000) claim that a more transparent accounting model is emerging and that a common law accounting model is useful not only for international transactions, but also for local reporting.
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