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See detailThe Effect of the German Accounting Law Modernization Act (BilMoG) on the Earnings Quality of Private Firms
Lopatta, Kerstin UL; Kaspereit, Thomas UL; Jaeschke, Reemda et al

in Corporate Finance (2013), (5), 234-242

The 2009 Accounting Law Modernization Act (BilMoG) had a considerable impact on German accounting principles, especially in terms of tax regulations, recognition, and measurement options. This paper ... [more ▼]

The 2009 Accounting Law Modernization Act (BilMoG) had a considerable impact on German accounting principles, especially in terms of tax regulations, recognition, and measurement options. This paper analyzes whether these changes have had a positive effect on the quality of earnings reported in German financial statements. We find that earnings management significantly decreased after the implementation of BilMoG. This study is the first to examine potential improvements on earnings quality as a result of BilMoG. Our results indicate that in the run-up to the reform, legislators effectively aligned domestic accounting standards with IFRS principles, which led to improved transparency within financial reporting. [less ▲]

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