EuroEconomica, Vol 36, No 1 (2017)

A Review on Accounts Manipulation Via Loan Loss Provisions to Manage Earnings and impact of IFRS

Albulena Shala, Skender Ahmeti, Sh. Perri Rezearta


Among research on financial reporting in banking industry, studies specifically investigate estimation on provisions that are important bank accruals. Using a non-statistical technique of meta-synthezis on our review, we have researched the motives, existence, and effects of IFRS in income smoothing. Management can apply income smoothing based on self interest purposes that are related to work contracts and bonuses, then about dividents, about their reputation regarding the prediction of incomes, to avoid lack of analists’ expectations on incomes, to signal information on incomes, etc. Most of the research identify income smoothing in the banking sector, but also in other industries. Aside from this, based on research, application of IFRS-es has not decreased income smoothing in most of the countries where the studies were conducted.



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