According to Barth et al. (2007:2), IASB‟s goal of developing an internationally
acceptable set of high quality financial reporting standards also meant allowable accounting
alternative and accounting measurements that better reflect economic position and performance.
Ashbaugh and Pincus (2001:422) argue that limiting alternatives can increase accounting quality
because doing so limits managements‟ opportunistic discretion in determining accounting
amounts.
Therefore, accounting amounts that reflect a firm‟s underlying economics can increase
accounting quality because investors will have access to better information for their decision
making.
Other accounting literature in this area also argues that more rigorous enforcement of
adoption can also lead to better accounting quality. On this basis, this study hypothesizes that
accounting amounts reported on IFRS basis in Kenya are of higher quality than those of the
domestic standards known as Kenya Accounting Standards (KAS).