Accounting professors to be published in Accounting Horizons

Mike Ilitch School of Business accounting professor Dr. Cheol Lee's paper — "Does the Mandatory Adoption of IFRS Improve the Association between Accruals and Cash Flows? Evidence form Accounting Estimates" — has been accepted at Accounting Horizons.

Accounting Horizons is one of three association-wide journals published by the American Accounting Association. This journal seeks to bridge academic and professional audiences with articles that focus on accounting and provides insights pertinent to the accounting profession, according to its website.  

Lee wrote the paper along with Jimmy Downes and Tony Kang from the University of Nebraska and Sohyung Kim from Brock University. 


We investigate the effect of mandatory International Financial Reporting Standards (IFRS) adoption in the European Union on the association between accounting estimates and future cash flows, a key concept of accounting quality within the International Accounting Standard Board conceptual framework. We find that the predictive value of accounting estimates improves after IFRS adoption. This improvement is largely driven by specific types of accounting estimates, such as accounts receivable, depreciation, and amortization expense. We also find that the improvement is concentrated in countries with larger differences between pre-IFRS domestic GAAP and IFRS. Our findings suggest that IFRS allow managers to exercise their judgment to provide information about future cash flows through the more subjective/judgmental portion of accounting accruals.

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