Potential Adoption of IFRS by the United States: A Critical View
59 Pages Posted: 18 Jan 2011 Last revised: 6 Feb 2014
Date Written: January 15, 2011
Abstract
This paper discusses the potential adoption of International Financial Reporting Standards (IFRS) by the United States (U.S.). We use the reporting decisions of foreign U.S. listed firms as signals for U.S. capital markets’ accounting standard preferences and demand for financial information. Our analysis of the 2009 (2010) annual reports filed with the SEC reveals that only 19 (23) percent of all foreign issuers file IFRS reports, although the reconciliation to U.S. GAAP requirement was eliminated in 2007. Thus, our results indicate that the majority of foreign filers in 2009 and 2010 use U.S. GAAP disclosure practices. Moreover, we provide evidence that cross-listed firms rarely change their filing behavior over the two year sample period. Our analysis shows that the International Accounting Standards Board (IASB) is subject to problems connected with its structure and its limitations as a non-governmental organization (NGO). Therefore, we call for caution toward IFRS adoption by the SEC. We conclude by recommending an international treaty to provide better funding and oversight of the IASB and that steps be taken to harmonize enforcement of accounting standards around the world. Our analysis should be of interest to regulators, standard setters, national authorities, and companies interested in the current debate on a global set of accounting standards.
Keywords: Accounting, Regulation, Convergence, Enforcement, IFRS, U.S.-GAAP, IASB, FASB, SEC, Standard setting, U.S. capital markets
JEL Classification: G15, G30, K22, M41, M42
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
International Accounting Standards and Accounting Quality
By Mary E. Barth, Wayne R. Landsman, ...
-
Mandatory IFRS Reporting Around the World: Early Evidence on the Economic Consequences
By Holger Daske, Luzi Hail, ...
-
International Financial Reporting Standards (IFRS): Pros and Cons for Investors
By Ray Ball
-
Financial Statement Effects of Adopting International Accounting Standards: the Case of Germany
By Mingyi Hung and K.r. Subramanyam
-
Market Reaction to the Adoption of IFRS in Europe
By Chris Armstrong, Mary E. Barth, ...
-
Market Reaction to the Adoption of IFRS in Europe
By Chris Armstrong, Mary E. Barth, ...
-
By Vicentiu Covrig, Mark L. Defond, ...
-
By Vicentiu M. Covrig and Mark L. Defond
-
Adopting a Label: Heterogeneity in the Economic Consequences Around IAS/IFRS Adoptions
By Holger Daske, Luzi Hail, ...