Does enforcement of financial reporting matter?

Enforcement of financial reporting has gained new momentum in the European Union (EU) due to the so-called ‘IAS Regulation‘ (Regulation (EC) No. 1606/2002), with recital 16 requiring EU member states to take appropriate actions to ensure compliance with international accounting standards. Accordingly, several EU member states took concurrent or subsequent measures to increase the level of accounting enforcement, either by establishing new enforcement institutions, or by reforming existing ones. While these actions are designed to enhance accounting compliance by unfolding a preventive and sanctioning function of enforcement, a thorough literature review reveals that there is only scarce empirical evidence on whether this aim has been indeed achieved. Striving to shed light on the impact of recent enforcement reforms, this dissertation examines the sanctioning function in the German enforcement system by investigating shareholder reactions to error announcements. Moreover, a cross-country analysis of 20 EU member states provides novel insights on the postulated preventive function in the aftermath of enforcement reforms. In summary, this dissertation aims to improve the understanding of the economic impact of accounting enforcement in Germany and the EU.:I. Does Enforcement of Financial Reporting Matter? Empirical Evidence from Germany and Europe – Overview of the Dissertation 1 Introduction to the Research Context 2 Overview and Findings of the Manuscripts II. Enforcement of Financial Reporting – A Corporate Governance Perspective 1 Introduction 2 Theoretical Background 3 Identification and Description of Relevant Literature 4 Critical Discussion 5 Conclusion and Limitations III. Determinants of Investor Reactions to Error Announcements – Extended Evidence from Germany 1 Introduction 2 The German Enforcement System 3 Previous Research and Hypotheses Development 4 Methodology 5 Results 6 Robustness Tests 7 Conclusion IV. Error Announcements, Auditor Turnover, and Earnings Management – Evidence from Germany 1 Introduction 2 Institutional Background: The German Enforcement System 3 Previous Research and Hypotheses Development 4 Methodology 5 Results 6 Robustness Tests 7 Conclusion V. Does Enforcement Change Earnings Management Behavior? Evidence from the EU after Mandatory IFRS Adoption 1 Introduction 2 The Development of National Enforcement Institutions in the EU 3 Related Literature and Hypothesis Development 4 Research Design and Data Description 5 Results 6 Additional Analyses and Robustness Tests 7 Conclusio

Does enforcement of financial reporting matter?

Enforcement of financial reporting has gained new momentum in the European Union (EU) due to the so-called ‘IAS Regulation‘ (Regulation (EC) No. 1606/2002), with recital 16 requiring EU member states to take appropriate actions to ensure compliance with international accounting standards. Accordingly, several EU member states took concurrent or subsequent measures to increase the level of accounting enforcement, either by establishing new enforcement institutions, or by reforming existing ones. While these actions are designed to enhance accounting compliance by unfolding a preventive and sanctioning function of enforcement, a thorough literature review reveals that there is only scarce empirical evidence on whether this aim has been indeed achieved. Striving to shed light on the impact of recent enforcement reforms, this dissertation examines the sanctioning function in the German enforcement system by investigating shareholder reactions to error announcements. Moreover, a cross-country analysis of 20 EU member states provides novel insights on the postulated preventive function in the aftermath of enforcement reforms. In summary, this dissertation aims to improve the understanding of the economic impact of accounting enforcement in Germany and the EU.:I. Does Enforcement of Financial Reporting Matter? Empirical Evidence from Germany and Europe – Overview of the Dissertation 1 Introduction to the Research Context 2 Overview and Findings of the Manuscripts II. Enforcement of Financial Reporting – A Corporate Governance Perspective 1 Introduction 2 Theoretical Background 3 Identification and Description of Relevant Literature 4 Critical Discussion 5 Conclusion and Limitations III. Determinants of Investor Reactions to Error Announcements – Extended Evidence from Germany 1 Introduction 2 The German Enforcement System 3 Previous Research and Hypotheses Development 4 Methodology 5 Results 6 Robustness Tests 7 Conclusion IV. Error Announcements, Auditor Turnover, and Earnings Management – Evidence from Germany 1 Introduction 2 Institutional Background: The German Enforcement System 3 Previous Research and Hypotheses Development 4 Methodology 5 Results 6 Robustness Tests 7 Conclusion V. Does Enforcement Change Earnings Management Behavior? Evidence from the EU after Mandatory IFRS Adoption 1 Introduction 2 The Development of National Enforcement Institutions in the EU 3 Related Literature and Hypothesis Development 4 Research Design and Data Description 5 Results 6 Additional Analyses and Robustness Tests 7 Conclusio

Does enforcement of financial reporting matter?

Enforcement of financial reporting has gained new momentum in the European Union (EU) due to the so-called ‘IAS Regulation‘ (Regulation (EC) No. 1606/2002), with recital 16 requiring EU member states to take appropriate actions to ensure compliance with international accounting standards. Accordingly, several EU member states took concurrent or subsequent measures to increase the level of accounting enforcement, either by establishing new enforcement institutions, or by reforming existing ones. While these actions are designed to enhance accounting compliance by unfolding a preventive and sanctioning function of enforcement, a thorough literature review reveals that there is only scarce empirical evidence on whether this aim has been indeed achieved. Striving to shed light on the impact of recent enforcement reforms, this dissertation examines the sanctioning function in the German enforcement system by investigating shareholder reactions to error announcements. Moreover, a cross-country analysis of 20 EU member states provides novel insights on the postulated preventive function in the aftermath of enforcement reforms. In summary, this dissertation aims to improve the understanding of the economic impact of accounting enforcement in Germany and the EU.:I. Does Enforcement of Financial Reporting Matter? Empirical Evidence from Germany and Europe – Overview of the Dissertation 1 Introduction to the Research Context 2 Overview and Findings of the Manuscripts II. Enforcement of Financial Reporting – A Corporate Governance Perspective 1 Introduction 2 Theoretical Background 3 Identification and Description of Relevant Literature 4 Critical Discussion 5 Conclusion and Limitations III. Determinants of Investor Reactions to Error Announcements – Extended Evidence from Germany 1 Introduction 2 The German Enforcement System 3 Previous Research and Hypotheses Development 4 Methodology 5 Results 6 Robustness Tests 7 Conclusion IV. Error Announcements, Auditor Turnover, and Earnings Management – Evidence from Germany 1 Introduction 2 Institutional Background: The German Enforcement System 3 Previous Research and Hypotheses Development 4 Methodology 5 Results 6 Robustness Tests 7 Conclusion V. Does Enforcement Change Earnings Management Behavior? Evidence from the EU after Mandatory IFRS Adoption 1 Introduction 2 The Development of National Enforcement Institutions in the EU 3 Related Literature and Hypothesis Development 4 Research Design and Data Description 5 Results 6 Additional Analyses and Robustness Tests 7 Conclusio