This paper reports the results of the empirical research of firm’s incentives that determine accounting quality of firms applying IFRS. In particular, we examine earnings management constructs often used to assess accounting standards quality. We perform a multivariate regression analysis on firms accounting data from 2006 to 2008. Our results provide evidence that large firms have lower cross-sectional absolute discretionary accruals or less earnings management. Further, we find that firms with debt issuing would have higher cross-sectional absolute discretionary accruals or more earnings management. Also, firms whose financial statements are audited by a “Big 4” do not appear to have a clear impact on accounting quality. The different overall results for countries like UK and France indicate that different firms accounting incentives dominate accounting standards in determining accounting quality. These findings contribute to the literature by analysing the determinants of accounting quality in one setting where high level accounting standards are already in use.

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Accounting Quality,IFRS,European Union