The Leverage Effect on Financial Performance. A Review of Empirical Evidence

The study examines the International Financial Reporting Standards (IFRS), highlighting its role in reducing accounting alternatives and management discretion to combat earnings management. However, it also addresses the counterargument that IFRS's flexibility and emphasis on fair value may actually provide firms with increased opportunities for earnings manipulation. This contradiction serves as the impetus for the research, exploring the implications of IFRS on corporate governance and financial reporting practices.