Financial statement effects of adopting international accounting standards: the case of Germany |
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| Authors: | Mingyi Hung K R Subramanyam |
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| Institution: | (1) Leventhal School of Accounting, Marshall School of Business, University of Southern California, Los Angeles, CA 90089-0441, USA |
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| Abstract: | Using a sample of German firms, we investigate the financial statement effects of adopting International Accounting Standards
(IAS) during 1998 through 2002. We find that total assets and book value of equity, as well as variability of book value and
income, are significantly higher under IAS than under German GAAP (HGB). In addition, book value and income are no more value
relevant under IAS than under HGB, and HGB (IAS) income is highly persistent (transitory). Finally, we find weak evidence
that IAS income exhibits greater conditional conservatism than HGB income. Our results are consistent with the fair-value
(income smoothing) orientation of IAS (HGB).
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| Keywords: | International Accounting Standards Germany Fair-value accounting |
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