The relationship between financial reporting standards and accounting irregularities: evidence from US banks

Creative Commons License

AKGÜN A. İ., Altunbaş Y., Uymaz Y.

Journal of Financial Crime, cilt.28, sa.4, ss.1161-1178, 2021 (Scopus)

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 28 Sayı: 4
  • Basım Tarihi: 2021
  • Doi Numarası: 10.1108/jfc-10-2020-0218
  • Dergi Adı: Journal of Financial Crime
  • Derginin Tarandığı İndeksler: Scopus, ABI/INFORM, Business Source Elite, Business Source Premier, Criminal Justice Abstracts, Public Affairs Index, vLex
  • Sayfa Sayıları: ss.1161-1178
  • Anahtar Kelimeler: Accounting Irregularities, Bank Performance, International Financial Reporting Standards, The Dodd–Frank Act
  • Açık Arşiv Koleksiyonu: AVESİS Açık Erişim Koleksiyonu
  • Ankara Yıldırım Beyazıt Üniversitesi Adresli: Evet

Özet

© 2020, Emerald Publishing Limited.Purpose: The purpose of this paper is to explore whether the choice of International Financial Reporting Standards (IFRS) vs Generally Accepted Accounting Principles (GAAP) is associated with the frequency and likelihood of accounting irregularities and fraud in US banks. Design/methodology/approach: The authors examine the relationship between financial reporting standards and accounting irregularities in publicly listed US banks. Using a sample of 4,284 banks with accounting irregularities observed in the USA over the period of 1996–2014. They used logit model to estimate the likelihood of corporate misreporting having been committed in terms of accounting irregularities. Findings: The authors show that banks that use US GAAP exhibit better operating performance than fraudulent banks that use IFRS except for certain variables. They also find that fraudulent banks are more likely to commit accounting irregularities when they have to follow IFRS and banks have relatively better bank performance. Practical implications: Overall, the empirical findings result consistent with Kohlbeck and Warfield’s (2010) find that accounting standards are linked to fewer accounting irregularities. Originality/value: In this study, accounting irregularities have a significant effect on bank performance during the Dodd–Frank period. It finds that banks that choose to use IFRS are more likely to have accounting irregularities and to engage in fraud.