Does IFRS adoption curb earnings management? Evidence from Family-Owned Firms in India

Abstract

This study explores how the adoption of Ind AS, India’s version of IFRS-converged accounting standards, has influenced earnings management practices among listed firms. It particularly examines whether the effectiveness of these reforms depends on internal corporate factors such as family ownership and board independence. Using a balanced panel of 173 non-financial firms over a 14-year period (2009-10 to 2022-23), the study applies the Modified Jones Model to estimate discretionary accruals and employs fixed-effects regression to evaluate the impact of Ind AS. The findings suggest that Ind AS adoption does lead to a meaningful reduction in earnings management, signalling improved financial reporting quality. However, this positive effect is less pronounced in firms with strong family ownership, pointing to the enduring influence of ownership concentration. Encouragingly, firms with more independent boards are better able to curb earnings manipulation, even in the presence of dominant family control. These results underscore the importance of pairing regulatory reforms with robust governance mechanisms. By shedding light on the interplay between accounting standards and firm-level characteristics, this research adds fresh insights to the literature on financial reporting in emerging economies and highlights the conditional nature of reform outcomes in the Indian context.