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“Accounting quality” Mid Term review February 2009, Valencia. Zoltan Novotny-Farkas (ESR, Frankfurt) Beatriz García Osma (ER, Lancaster) Joao Toniato (ESR, Ljubljana) Yachang Zeng (ESR, Tilburg). Accounting quality.

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“Accounting quality” Mid Term review February 2009, Valencia

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accounting quality mid term review february 2009 valencia

“Accounting quality”Mid Term reviewFebruary 2009, Valencia

Zoltan Novotny-Farkas (ESR, Frankfurt)

Beatriz García Osma (ER, Lancaster)

Joao Toniato (ESR, Ljubljana)

Yachang Zeng (ESR, Tilburg)

accounting quality
Accounting quality

Accounting quality is a widely used term for certain accounting metrics that are assumed to capture dimensions of accounting quality

Typically, these include earnings management, timeliness, (asymmetric) conservatism, value relevance, predictability

Is there a difference in accounting quality before and after IFRS adoption?

Are changes in accounting quality related to country-level or sector-level legal/institutional/governance factors?


Zoltan Novotny-Farkas

Since 05/2007 INTACCT ESR, Goethe University Frankfurt

Since 5/2007 PhD Studies, Goethe University Frankfurt

01/2006 Diploma in International Business Administration, University of Vienna

PhD supervisor: Günther Gebhardt (Goethe University Frankfurt)

INTACCT supervisors: Günther Gebhardt, Holger Daske (University of Mannheim/Frankfurt)



Excellent research environment

Probably most beautiful campus

in Europe


Great training workshops

Transfer of knowledge

Networking opportunities

Research and social community

current research
Current research

Main Research Topic: The Effects of IFRS adoption on the loan loss provisioning of banks


Banks play a key role in economy, but due to the peculiarities of the industry banks are most often left out in empirical accounting research

Focus on loan loss provisioning, as it determines significantly the quality of financial statements and the way banks are communicating credit risk

IFRS adoption changes bank accounting significantly – for better or worse?


Assemble a proprietary database on European banks

Analyze the transitional effects on key bank accounting variables

Earnings management pre- versus post IFRS using bankspecific accrual models

preliminary results future work
Preliminary results/Future work

Preliminary results:

IFRS adoption effects vary across European countries

Diversity in the effects are due to different pre-IFRS loan loss provisioning behaviour and differences in bank portfolio characteristics

Existing bank regulatory regimes have an IFRS “overriding” effect

IFRS loan loss provisioning is less conservative and less forward-looking

Future work:

How do financial statement users perceive the above mentioned changes?

Collaborative projects with ESRs


Beatriz García Osma

2000 BA (Lda) Business Administration, U Autonoma de Madrid

2002 MPhil (DEA) Financial Economics and Accounting, UAM.

2006 PhD Accounting and Finance, Lancaster University

Current position:

Lecturer in Accounting and Financial Economics, UAM.

INTACCT visits: October-December 2007 (3 months)

October-December 2008 (3 months)

INTACCT Supervisors: Peter F. Pope & Steve Young


INTACCT ER Lancaster:

INTACCT workshops in Tilburg and Valencia.

Weekly research seminars and PhD seminar. Courses on staff development whilst at Lancaster.

Access to best available databases, opportunity to discuss research with INTACCT researchers and faculty.

Weekly meetings and discussions.

Excellent research climate: Lancaster (UK) > 3200mm of rain each year (230 ‘wet’ days/year).

current research1
Current Research

Main research topic: “Earnings quality effects of mandatory IFRS adoption” (coordinator: P.F. Pope, Lancaster).


IFRS increase transparency and comparability (Reg. EC 2002/1606)

Earnings are a key variable for investors and managers (Biddle et al. 1995, Barth et al. 2002, Graham et al. 2005).

Legal, institutional, cultural and political forces have remained local: Can accounting practice be harmonized? (Ball 2006).


Study changes in world-wide accounting quality as measured by earnings management (Leuz et al. 2003, Burghstahler et al. 2006).

results and future research
Results and Future Research

Main results:

IFRS adoption represents significant changes to NI, TA and SE. Overall, ROE (ROA) is 12% (14%) greater under IFRS.

However, countries with the largest regulatory distance to IFRS (e.g., Spain, Greece) show the least significant adjustments.

IFRS transition predicts changes to overall quality post-IFRS.

Evidence suggest uneven implementation and enforcement and heterogenous earnings quality effects.

Future research:

“A practical guide to using financial statement data from commercial databases” (with P. Alves, W. Beekes & S. Young).

“First-time adoption policy for plant, property and equipment” (with S. Young).


João Toniato

Since 10/2008 INTACCT ESR, University of Ljubljana – Slovenia

Since 10/2006 PhD Studies, University of Lancaster – UK

07/2006 BA (Honours) Accounting and Finance, Manchester Business School – UK

12/2001 BSc Computer Science, Federal University of Espirito Santo – Brazil

PhD Thesis: “Predictability and Pricing of Accounting Information under IFRS”

PhD supervisors: Ken Peasnell and Young-Soo Choi (Lancaster University)

INTACCT supervisor: Aljoša Valentinčič (University of Ljubljana)



PhD and Research Seminars

Great research environment


Workshops / Colloquia

Focused supervision

International cooperation with Frankfurt University

Challenging environment

Contact with distinguished academics



“Predictability and Pricing of Accounting Information under IFRS” (with Ken Peasnell and Young-Soo Choi)

“Can Analyst Forecast Error Help Explain the Mispricing of Dividends?” (with Aljoša Valentinčič)

Other Activities:

Coordination of reporting activities

Conference and seminar attendance

ESR/ER group projects

future plans
Future Plans


Finish current projects

Initiate new projects in

collaboration with Frankfurt

University researchers

Project on write-offs and IFRS

After INTACCT (10/2010)  job market


Yachang Zeng

Since Oct 2008 ESR with INTACCT, Tilburg University

Since Oct 2005 PhD in Accounting & Finance, Lancaster University

2004 - 2005 MSc in Accounting & Finance, Lancaster University

2001 - 2004 Senior Accountant (CPA), China.

1997 - 2001 Bachelor in Auditing, Sun Yat-Sen University (China)

PhD Thesis: “Analysts’ ability to detect and disclose low accounting quality”

PhD Supervisor: Steve Young and Daphne Lui (Lancaster University)

INTACCT Supervisor: Willem Buijink and Philips Joos (Tilburg University)


Practical Matters in Settling Down





Research Environment



Networking Opportunities



Interaction in the Host Institution

Responsibilities in the Network




Current Project

Impact of IFRS on the feasibility of using global firms as comparable firms

Working paper

Analysts’ ability to detect and disclose low accounting quality

Factors explaining analysts’ disclosure of low accounting quality

future plans1
Future Plans

Future Studies

Content analysis about the valuation models that analysts used and the source of comparable firms chosen by analysts after the adoption of IFRS


Academic job market