How Does the Strength of the Financial Regulatory Regime Influence Auditors' Judgments to Constrain Aggressive Reporting in a Principles-Based Versus Rules-Based Accounting Environment?

SYNOPSIS

With the movement toward adoption of International Financial Reporting Standards (IFRS) worldwide, a question arises as to whether the adoption of a principles-based approach, such as IFRS, will ultimately result in higher-quality financial reporting. This issue is particularly relevant because, even though for now the SEC is not adopting IFRS, the securities markets and the SEC still need to ponder the implications of a decision that may lead to the ultimate adoption of, or at least some degree of convergence with, IFRS in the U.S. To examine this issue, we employ an ...more