The study looked at how financial reporting incentives affect accounting quality changes when companies adopt International Financial Reporting Standards (IFRS). In Germany, where IFRS adoption was voluntary before becoming mandatory, firms that voluntarily adopted IFRS showed improved accounting quality. On the other hand, firms that resisted IFRS adoption had closer ties to banks and inside shareholders, leading to lower incentives for better accounting standards. The results suggest that financial reporting incentives play a bigger role than accounting standards in determining accounting quality.