Impact of change in TFRS for PAEs and type of ownership structure on earnings quality and profitability ratio

Abstract

The objective of this paper is to study: 1) Impact of change in TFRS for PAEs during 2014 – 2020 for annual reports of Agriculture Business and Foods from SET; 2) Level of earnings quality and profitability ratio of Agriculture Business and Foods from SET during 2014 - 2020; and 3) Factors affecting on level of earnings quality and profitability ratio of Agriculture Business and Foods from SET during 2014 – 2020. Data was collected from 35 firms by using Consolidated Financial Statement Annual Report by using Modified Jones Model. This research results used SPSS software for analyses Descriptive Statistics and Multiple Regression Analysis. The results showed that: 1) Almost CEO has chosen to reduce the impact of change in TFRS and report only necessary impact. They showed the only materiality of professional judgement by adjusted in the impact of unappropriated retained earnings at the beginning periods for adjusted separate entry in Change in Financial Position Statement. This result also showed that almost items during 2019 and 2020 have more impact from change in TFRS 15, TFRS 7, TFRS 9, and TAS 32; and 2) Before TFRS for PAEs have impact (published), It showed the effects of fluctuation on Discretionary Accrual (DAC). It trends to decrease in Discretionary Accrual after TFRS for PAEs have published for many years. However, it showed that level of earnings quality by using DAC between 2014 – 2020 was not significant at α = 0.05 or level of significant at 95%. While the consolidated financial statements during 2014 – 2017, Agriculture Business and Foods have increasing in ROA continuously. However, after situations of impact from changing TFRS in 2019 – 2020 and situation of Corona Virus 2019 have effect on the fluctuation of ROA decreasingly.; and 3) the effect of change in TFRS for PAEs and type of ownership structures and group of businesses have no impact on level of earnings quality at significant level (α =0.05). However, the effect of change in TFRS for PAEs has negative impact on return on assets (ROA) at significant level (α <0.01). While, type of ownership structure, group of businesses and firm size have positive impact on ROA at significant level (α < 0.05)