Fair Value Accounting and Earnings Quality : Listed Real Estate Companies in Sweden

Abstract: This master thesis has been written for the Karlstad Business School in the subject of "Accounting & Control". The research and writing period was from Aprol until June 2013. Earnings are one of the most vital indicators of the fianacial position of a company. Earnings qualityis a perplexing concept. The characteristics that make earnings of high quality are various and are a matter of subjectivity. After the adoption of IFRS in 2005, the listed companies in Sweden had to prepare their fianacila statements relying on the new standards. IFRS introduced fair value accounting to the companies in order to evaluate their assets and liabilities. The aim with this thesis is to investigate if fair value accounting improved earnings quality in listed real estate companies in Sweden. In order to collect our data, a quantitative research was conducted. Self-ompletion questionnaires with open questions were sent to CFOs with the purpose of express their opinion about the term "earnings quality", the adoption of IFRS and fair value accounting and if the influence of these factors on earnings quality. The results showed that managers indeed believe that fair value accounting improved the quality of earnings in their companies. Moreover, they answered that they dod not consider IFRS as a barrier in the accounting quality and that fair value provides reliable and accurate fianncial information which support the decision-making.