Board monitoring and earnings management pre and post-IFRS

In this paper we address the question of whether the board of directors is more effective in constraining earnings management after the mandatory application of IFRS. We focus on two board characteristics, i.e., board independence and the existence of an audit committee. Our empirical results suggest that board independence and audit committees become more effective in reducing earnings management after the introduction of IFRS. The paper shows that the accounting regulatory framework significantly contributes to the effectiveness of the two corporate governance mechanisms. Our findings also confirm that a company’s corporate governance characteristics remain an important determinant of earnings quality; therefore, an analysis of the effects of new regulations cannot ignore firm-level determinants.