The Impact of Revenue Recognition by Applying Thai Financial Reporting Standard 15 (TFRS 15) on the Earnings Quality of Listed Companies in the Stock Exchange of Thailand
Keywords:
Thai Financial Report Standard No 15 (TFRS 15), Change in Revenue, Earnings Quality, Discretionary AccrualAbstract
This article aims to study the impact of changes in total revenue on earnings quality by considering the interaction factors between the adoption of Thai Financial Reporting Standards 15 (TFRS 15) and changes in total revenue through discretionary accruals from management's judgment and to study the differences in the earnings quality through discretionary accruals from management’s judgment on the impact of changes in total revenue before and after the adoption of TFRS 15 on the listed companies on the Stock Exchange of Thailand on The Modified Jones model and Yoon, Miller, and Jiraporn model. By collecting data, a total of 319 companies were collected data for a period of 5 years, which is considered as samples of 1,595 companies and analyzed financial statements of companies from 2018 to 2021. 2018 was the year before the enforcement, 2019 was the year that was effective, and 2020 and 2021 were years after the enforcement. To analyze descriptive statistics and inferential statistics, using multiple linear regression analysis and analysis of two related sample groups. Research results are 1) according to the modified Jones model, it was found that by the implementation of TFRS 15, the interaction effect between TFRS 15 and total revenue changes, significantly increased the earnings quality through discretionary accruals from management's judgment, with statistical significance. However, if analyzed 2) according to the Yoon, Miller, and Jiraporn model, it was found that by the implementation of TFRS 15, along with the interaction effect between the previous two variables, increased the earnings quality through discretionary accruals, but without statistical significance. And 3) The year before (2018) and the year after (2019) of the implementation of TFRS 15 have differences on the average quality of the earnings through accruals resulting from management’s judgment according to the impact of income change based on The Modified Jones model and Yoon, Miller, & Jiraporn model. The investors and stakeholders can understand information, methods, and results of profit quality. Besides, it can be used to compare the impact of profit quality before and after the implementation of TFRS 15.
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