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ABSTRACT: This paper is based on the research opportunity created by the Swedish voluntary adoption of IFRS during 1991–2004. In connection with the mandatory EU adoption of IFRS in 2005, the preceding voluntary adoption made it possible to observe income statement and balance sheet numbers under two different accounting regimes for the same standards and the same firms during the same time period. The Swedish pre-2005 adoption was, arguably, soft, involving national deviations from IFRS and weak enforcement institutions. For a sample of the 132 largest Swedish-listed companies, the hard (EU-regulated) adoption caused material increases of both net profit and balance sheet numbers, but these increases were caused by standards not previously adopted via the Swedish standard setter. The increase in the valuation of net assets was attributed to the forces at the national level which, pre-2005, had worked in order to preserve the Swedish accounting tradition of balance sheet conservatism. With regard to the international standards voluntarily adopted before 2005, the results indicated that firms, on average, used the flexibility offered by the soft adoption regime to manage earnings and shareholders' equity upwards. Sweden's ambition to voluntarily move toward more capital market-oriented financial reporting was delayed and hindered by forces defending the conservative accounting tradition and, accordingly, a soft IFRS adoption policy was chosen. However, in line with recent research on standards and incentives, the empirical results of the current paper indicate that this gave firms discretion that was used for earnings management purposes.