We investigate the effects of mandatory IRS adoption in th EU on accounting conversation, an essential feature of earning quality, and the way large audit firms(big 4) interact with it.

Since 2005, all European Union listed firms comply with IFRS. The resulting mandatory changes in accounting methods have substantially affected reported earnings. Using the factSet/JCF database that collects 2005 earnings forecast based on both IFRS and local GAAP for a set of European listed...