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Management Review Quarterly
Published in: Management Review Quarterly 1/2020

22-05-2019

Revisiting the effectiveness of the German accounting enforcement reforms: a replication study

Authors: Marius Gros, Alexander Nevrela

Published in: Management Review Quarterly | Issue 1/2020

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Abstract

In this paper, we replicate and extend the study “Economic Consequences of Accounting Enforcement Reforms: The Case of Germany” published by Ernstberger, Stich and Vogler (ESV) in the European Accounting Review in 2012. ESV (in Eur Account Rev 21(2):217–251, 2012) is, among others, widely cited for the evidence it provides on the weak but consistently positive effects of the German accounting enforcement reforms on earnings quality, stock liquidity and market valuation. The results were to be expected and are in line with the literature prior to 2012. More recent empirical archival and survey studies question these weak positive effects and, in particular, their persistence. Hence, we believe it is beneficial to provide further evidence on whether regulatory measures in the field of financial reporting show the intended “impact” and contribute to regulators’ objectives. As a first step, we replicate ESV (2012), and in a second step, we extend the analysis to a longer-term investigation period. While some of our findings are similar to ESV (2012), we are not able to provide consistent evidence for an increase in earnings quality, stock liquidity or market valuation.
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Footnotes
1
Using EBSCOhost and ScienceDirect to search the European Accounting Review, the Journal of Accounting and Economics and The Accounting Review for the naive search-term ‘replication’ led us to a total of 23 search results. The search was carried out in April 2018.
 
2
A brief description of the German DPR/BaFin accounting enforcement mechanisms and the inherent ‘name and shame-mechanism’ is included in Sect. 2.
 
3
We used “Total Debt” (WC03255) to calculate the leverage. Another analysis using “Total Liabilities” (WC03351) showed a considerably higher leverage value of above 60%. We choose “Total Debt” because of more reliable debt-values after considering some randomly picked annual reports.
 
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Metadata
Title
Revisiting the effectiveness of the German accounting enforcement reforms: a replication study
Authors
Marius Gros
Alexander Nevrela
Publication date
22-05-2019
Publisher
Springer International Publishing
Published in
Management Review Quarterly / Issue 1/2020
Print ISSN: 2198-1620
Electronic ISSN: 2198-1639
DOI
https://doi.org/10.1007/s11301-019-00162-9

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