CAPIC REVIEW

Journal of Accounting, Auditing and Business Management

ISSN 0718-4662

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Vol. 17 (2019): CAPIC REVIEW
Investigation

Application of IFRS in Colombia and Chile: A comprehensive analysis on the quality of financial information.

Harold Contreras
Universidad de Chile
Giovanni Malatesta
University of Chile
Francisca Altamirano
Universidad de Chile
Categories

Published 2021-02-03

Keywords

  • accruals quality,
  • earnings quality,
  • international financial reporting standards

How to Cite

Contreras, H., Malatesta, G., & Altamirano, F. . (2021). Application of IFRS in Colombia and Chile: A comprehensive analysis on the quality of financial information. CAPIC REVIEW, 17, 1–14. https://doi.org/10.35928/cr.vol17.2019.75

Abstract

The application of IFRS worldwide marked one of the most relevant regulatory changes in accounting history. Regulators of the capital markets in Latin America, not unaware of this process, also start to require the application of this accounting standard as of 2008. The evidence in the literature is contradictory regarding the effects of IFRS on reported earnings quality by firms. This article studies the impact of the application of IFRS on earnings quality for a group of 321 companies listed on the Stock Exchanges of Chile and Colombia. To do this, we analyze six quantitative metrics aimed to capture earnings quality in different dimensions. The results of the analysis show that the mandatory requirement of IFRS has decreased the level of discretion in the application of accruals, which results in an improvement in the quality of financial results. Considering that discretionary metrics are the ones that best capture the quality of financial results, the study findings allow us to conclude that the application of IFRS has had a positive effect on the quality of financial information for companies in Chile and Colombia.

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