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Could IFRS Replace US GAAP? A Comparison of Earnings Attributes and Informativeness in the US Market

Posted: 14 May 2008 Last revised: 15 Dec 2017

Elizabeth A. Gordon

Temple University - Department of Accounting

Bjorn Jorgensen

London School of Economics & Political Science (LSE) - Department of Accounting and Finance

Cheryl L. Linthicum

University of Texas - San Antonio

Date Written: August 12, 2008

Abstract

We compare various earnings attributes of two accounting standards in one regulatory environment. We consider all firms that file Form 20-F reconciliations from IFRS to USGAAP with the SEC for 2004-2006. We find USGAAP and IFRS share many earnings attributes with two notable exceptions: USGAAP exhibits higher cash persistence and value relevance. Both IFRS and USGAAP accruals are incrementally informative over cash flows. While USGAAP net income has incremental informativeness over IFRS earnings and cash flows, the reverse is not true. USGAAP exhibits higher relative information content. Our results inform US regulators considering whether to permit, or require, IFRS.

Keywords: accounting, international

JEL Classification: M41, M44, N20, N40, G18, G14, K22

Suggested Citation

Gordon, Elizabeth A. and Jorgensen, Bjorn and Linthicum, Cheryl L., Could IFRS Replace US GAAP? A Comparison of Earnings Attributes and Informativeness in the US Market (August 12, 2008). Available at SSRN: https://ssrn.com/abstract=1132908

Elizabeth A. Gordon

Temple University - Department of Accounting ( email )

Philadelphia, PA 19122
United States
2152046422 (Phone)

Bjorn N Jorgensen (Contact Author)

London School of Economics & Political Science (LSE) - Department of Accounting and Finance ( email )

Department of Accounting Room, OLD 2.17
Houghton Street
London, WC2A 2AE
United Kingdom

Cheryl L. Linthicum

University of Texas - San Antonio ( email )

One UTSA Circle
San Antonio, TX 78249
United States

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