International Journal of Economics and Finance; Vol. 6, No. 11; 2014 ISSN 1916-971X E-ISSN 1916-9728 Published by Canadian Center of Science and Education 229 Accounting Manipulations and IFRS: Evidence from French Companies Yosr Nouri 1 & Ezzeddine Abaoub 2 1 Higher Business School of Tunis, Tunisia 2 Faculty of Economics and Management of Tunis, Tunisia Correspondence: Yosr Nouri, Higher Business School of Tunis, 5 rue el Mahdia, app 2, imm 5, 2024 Megrine, Ben Arous, Tunisia. Tel: 2161-8993. E-mail: yosser.noury@yahoo.fr Received: May 19, 2014 Accepted: June 16, 2014 Online Published: October 25, 2014 doi:10.5539/ijef.v6n11p229 URL: http://dx.doi.org/10.5539/ijef.v6n11p229 Abstract This paper examines the impact of mandatory adoption of international accounting standards on the income smoothing and earning management. Using a simple of French firms indexed in the CAC all tradable for a period of ten years (2000–2009), we find convincing evidence that the implantation of IFRS contributed to less income smoothing and earning management compared to the local accounting standards, even during the recent economic crisis. Less earning manipulation assures higher levels of reliability information. Keywords: discretionary accruals, earning smoothing, international accounting standards, economic crisis, French, CAC all tradable 1. Introduction In 2002, the European Union has mandated the implementation of International Financial Reporting Standards (IFRS) from January 1st, 2005 for listed companies establishing consolidated accounts. The main purpose is to improve the comparability and the quality of financial reporting in the context of global economy. In this study, we seek to examine whether the adoption of international accounting standards reduces attempts to manage earning of French companies to achieve better financial information, even during the recent economic crisis. We focus on France since the transition to international accounting standards, intended primarily to the needs of investors and supporting the dominance of an economic approach to the detriment of historical and fiscal approach, would lead to a new accounting philosophy and an upheaval in financial communication within the French companies that have an accounting system governed by laws and regulations, primarily characterized by a fiscal rigidity designed to meet the needs of lenders and the state (Wehrfritz & Haller, 2014) Similarly, previous literature shows that earnings management is higher in code-law countries, with low investor protection rights, such as France, compared to common law countries (Tendeloo & Vanstraelen, 2005). Our study includes 145 French companies listed on the stock index CAC ALL TRADABLE. By focusing on a single country, we can better isolate the effect of IFRS on the earning management, since environmental factors remain constant over the period’ study. To test the impact of IFRS on earnings management, we conducted a comparative study where the sample is divided into two equal periods in terms of years, a pre-IFRS period and post-IFRS period, a study covering the whole period and an additional study covering the pre and post recent economic crisis period, after IFRS introduction. Our empirical results show that the application of IFRS reduces the earning management of French companies, even during the recent economic crisis. The remainder of this paper is strutured as follows. Section 2 provides theoretical background and hypothesis for the study. In Section 3, we describe our methodology and explain the research design. Our empirical comparative study results are discussed in Section 4. Section 5 presents our robustness tests. Section 6 details our empirical results covering the recent economic crisis period. Section 7 presents our conclusions and future research directions.