ABSTRACT

This study investigates whether the Adoption of IFRSs-based standards has an effect on Earnings Management specifically in the Banking and Mining sectors. There is however a limitation of the aftermath effects of IFRS in Emerging Economies and also a continuous elimination of Financial and Mining Industries from the samples of previous studies which motivated this study to investigate the impact of IFRS in the Banking and Mining Industries of the companies on the Johannesburg Stock Exchange. This study therefore used a sample of 12 firms listed on the Johannesburg Stock Exchange in both the Mining and Banking industries for a study period from 2002-2004 Pre-IFRS and 2010-2012 Post-IFRS using the Modified Jones Model. In agreement with previous studies the results indicate that Post-IFRS Earnings Management in both Banking and Mining industries reduced. Additionally the study also finds that there is no significant differences regarding Earnings Management comparing large and small size companies. The findings of this study are useful in providing various stakeholders e.g. JSE, investors, accounting and auditing professionals an additional tool for ensuring that financial reporting matches the real economic value of companies. It also creates an awareness for the non-adopting jurisdictions to adopt IFRS.