Assessing the difference between accounting quality of the incurred versus expected credit loss allowances

The dataset contains the variables used to test the impact on accounting quality in common law countries of banks following the change from the impairment model in International Accounting Standard 39 Financial Instruments: Recognition and Measurement (IAS 39), which is an incurred credit losses (ICL) model, to the impairment model in International Financial Reporting Standard 9 Financial Instruments (IFRS 9), which is an expected credit losses (ECL) model.

The accounting quality measures used are income smoothing, timely loss recognition and value relevance.

The sample used for the study consists of banks that have a primary listing on the main boards of the Australian Securities Exchange, the Johannesburg Stock Exchange, the London Stock Exchange, and the Toronto Stock Exchange, and the sample period spans from 2013 to 2021.

This study is a quantitative study and makes use of regression models. Most of the data were collected from the London Stock Exchange Group (LSEG) Datastream. The impairment of financial assets (IMP) and LA were hand-collected from each sample bank’s annual financial statements. All collected data were analysed using SAS software.