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Are IFRS-based and US GAAP-based Accounting Amounts Comparable?

75 Pages Posted: 7 Apr 2010 Last revised: 19 Sep 2012

Mary E. Barth

Stanford University - Graduate School of Business

Wayne R. Landsman

University of North Carolina Kenan-Flagler Business School

Mark H. Lang

University of North Carolina at Chapel Hill

Christopher D. Williams

University of Michigan, Stephen M. Ross School of Business

Date Written: March 8, 2012

Abstract

This study examines whether application of IFRS by non-US firms results in accounting amounts comparable to those resulting from application of US GAAP by US firms. IFRS firms have greater accounting system and value relevance comparability with US firms when IFRS firms apply IFRS than when they applied domestic standards. Comparability is greater for firms that adopt IFRS mandatorily, firms in common law and high enforcement countries, and in more recent years. Earnings smoothing, accrual quality, and timeliness are potential sources of the greater comparability. Although application of IFRS has enhanced financial reporting comparability with US firms, significant differences remain.

Keywords: IAS, IASB, International Accounting Standards, International Accounting Standards Board, International Financial Reporting Standards, US GAAP, Comparability, Comparable Financial Reporting Standards

JEL Classification: G12, G15, M41, M44, M47

Suggested Citation

Barth, Mary E. and Landsman, Wayne R. and Lang, Mark H. and Williams, Christopher D., Are IFRS-based and US GAAP-based Accounting Amounts Comparable? (March 8, 2012). Journal of Accounting & Economics, Vol. 54, Issue 1, pp. 68-93, August 2012; Rock Center for Corporate Governance at Stanford University Working Paper No. 78. Available at SSRN: https://ssrn.com/abstract=1585404 or http://dx.doi.org/10.2139/ssrn.1585404

Mary E. Barth (Contact Author)

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-9040 (Phone)
650-725-0468 (Fax)

Wayne R. Landsman

University of North Carolina Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-3221 (Phone)
919-962-4727 (Fax)

Mark H. Lang

University of North Carolina at Chapel Hill ( email )

Kenan-Flagler Business School
McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-1644 (Phone)
919-962-4727 (Fax)

Christopher D. Williams

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
(734)647-2842 (Phone)

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