We could observe differences in accounting quality for firms applying IAS for reasons other than those relating to the financial reporting system, such as firms’ incentives and economic environments. Regarding incentives, because application of IAS was largely voluntary during our sample period, incentives for firms that adopted IAS could have changed between the pre- and post-adoption periods, which resulted in their decision to adopt IAS. 4 The fact that firms might have adopted IAS as part of their response to changes in incentives could indicate that either their domestic standards did not permit them to reveal their higher accounting quality, or they adopted IAS to signal their higher accounting quality because they believe the market perceives IAS are higher quality than domestic standards. Both of these explanations are consistent with IAS being associated with higher accounting quality. 5
trading volume, for German firms trading on Germany’s New Market that apply U.S. standards and those that apply IAS. The sample is comprised primarily of young firms in high technology industries that trade on the same stock exchange. As a result, the firms face similar economic environments, incentives, and features of the financial reporting system other than account- ing standards, which permits Leuz  to attribute differences in information asymmetry to differences in accounting standards. Leuz  finds little evidence of differences in in- formation asymmetry for the two groups of firms. Our research question differs in three ways. First, the Leuz  comparisons relate to firms applying U.S. standards and IAS, whereas our comparisons relate to firms applying non-U.S. domestic standards and IAS. Second, whereas we focus on differences in accounting quality, Leuz  focuses on differences in infor- mation asymmetry, which is affected by a variety of factors in addition to accounting quality. Third, whereas Leuz  focuses on differences in information asymmetry arising from dif- ferences in accounting standards, we focus on differences in accounting quality arising from the financial reporting system comprehensively, of which accounting standards are only one part.
research, we assume that firms with less earnings smoothing exhibit more earnings variability (Lang, Raedy, and Yetman, 2003; Leuz, Nanda, and Wysocki, 2003; Lang, Raedy, and Wilson, 2005). We predict that firms applying IAS exhibit more variable earnings than those applying domestic GAAP. Our prediction is supported by two studies. First, Ewert and Wagenhofer (2005) shows that applying accounting standards that limit management’s discretion should result in higher variability in accounting earnings. Second, Leuz, Nanda, and Wysocki (2003) finds that earnings smoothing is less pronounced in common law countries. IAS are based on a conceptual framework similar to that found in common law countries. To test our prediction, we use two measures of earnings variability, variability of change in net income and variability of change in net income relative to variability of change in cash flow.
A number of studies have attempted to evaluate the IASC's internationalaccounting harmonization efforts (Nair and Frank, 1981; Evans and Taylor, 1982; McKinnon and Janell, 1984; Doupnik and Taylor, 1985; Doupnik, 1987; Nobes, 1987, 1990; IASC, 1988; Van der Tas, 1988). A review of these studies reveals that the majority of them have evaluated the IASC's internationalaccounting harmonization efforts at regulatory or standard-setting level in both developing and developed countries. The few studies (Evans and Taylor, 1982; Nobes, 1987, 1990; Van der Tas, 1988) which examined international harmonization of accounting practices at company level have only used reports of corporations in developed countries. No study appears to have measured (a) the extent to which corporations in developing countries comply with the IASC standards, or (b) the impact of the IASC standards on the accounting measurement and disclosure practices of enterprises in developing countries. These omissions are lamentable for a number of reasons. Firstly, most accounting professions in developing countries do not have national standard-setting bodies, hence, the majority of them simply adopt the IASC standards as issued. Given this backdrop, any harmonization study at standard-setting level in these countries is futile. The fundamental issue is the extent to which enterprises in developing countries conform to the IASC standards. Secondly, the target of the international harmonization effort is to have comparable financial reports published by enterprises in different countries and not merely having internationally harmonized accounting standards. Thirdly, the real challenge to the IASC members from developing countries and the ultimate test of their pledge of ``best endeavour,'' does not lie in the adoption of the IASs, but in ensuring that the IASC standards adopted are observed by enterprises in their respective countries. Finally, over 80 percent of the IASC members are from developing countries and the majority of them have adopted the IASs.
Much has happened in a very short period of time in the internationalaccounting environment. It now appears likely that in a fairly short period of time, companies around the world will be close to using a single set of high- quality accounting standards.
The curriculum has been accredited by two internationalAccounting professional bodies, i.e. the Certified Practising Accountant (CPA) Australia and the Chartered Institute of Management Accountants (CIMA). All graduates of the program are eligible for the professional level exam of CPA Australia. The program is one of the two Accounting programs in Indonesia that are acknowledged as the partners of CPA Australia. CIMA accredited curriculum enables the program to prepare the students to the management level of the Accounting professional exams. The program is among few Accounting programs in South East Asia that are accredited for management level of CIMA.