INCOME SMOOTHING AND TRANSPARENCY OF FINANCIAL STATEMENTS: EVIDENCE FROM LONDON STOCK EXCHANGE
Keywords:
Accounting Quality, Earnings Management, Financial Statements, IFRS, London Stock ExchangeAbstract
This study seeks to determine the transparency of financial statements information under IFRS of the companies registered on the London stock exchange. In this regard, annual data of financial statement information of companies registered on London Stock exchange is taken for the duration 2015 to 2020. Earnings management and value relevance are taken as a proxy for the transparency of financial accounting quality. In this study, the share price has been used as a dependent variable and the independent variables were net income per share and book value of equity per share. The regression model and Hausman test were applied and the findings of the regression model depict that the financial statement information of the companies registered on LSE produced under the IFRS is transparent and value relevant. Moreover, the results indicate that the accounting information produced under the IFRS has less scope of earnings management as compared to GAAP.
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