The impact of mandatory IFRS adoption on earnings management: Evidence from Morocco: A multinomial logit approach

Abstract

The purpose of this paper is to investigate whether the transition to IAS/IFRS deters or facilitates greater earnings management (Earnings smoothing), and assess the level of earnings management according to the accounting standards applied by companies listed on the Moroccan stock market. To achieve this goal, a logistic regression model is proposed to explain the effect of IFRS adoption in the Moroccan context. A quantitative study is carried out using a sample of 74 firms listed in the Casablanca Stock Exchange over a period of five years (2010-2015). As a result, we find convincing evidence that the implementation of IFRS contributed to less earnings management compared to the local accounting standards. This study should be of interest to regulators and policymakers as they are expected to assess the impacts of adopting IFRS.