Measuring the Impact of International Financial Reporting Standards on Market Performance of Publicly Traded Companies

Advances in Accounting, Vol. 29, No. 2, December 2013: 343-349

28 Pages Posted: 19 Jul 2012 Last revised: 6 Feb 2014

See all articles by Amanda M. Grossman

Amanda M. Grossman

Murray State University - Accounting Department

Murphy Smith

Texas A&M University-Corpus Christi-Department of Accounting

Wayne Tervo

Murray State University - Accounting Department

Abstract

The decision whether to require publicly traded companies to adopt International Financial Reporting Standards (IFRS) remains in flux. In 2008, the US Securities and Exchange Commission proposed a roadmap leading to complete acceptance of IFRS in the US. With the potential replacement of US GAAP with IFRS in the near future, understanding the impact of IFRS on corporate financial reporting is more important than ever. This study examines two factors which are critical considerations in the decision to accept or not accept IFRS in the US: How different is financial statement information derived under IFRS from information derived under US generally accepted accounting principles (GAAP); and how much incremental information value, if any, is provided by IFRS over US GAAP. The present study extends prior research by examining concurrently both differences and their impact on market performance. Findings of this study support the view that differences on financial statement results between IFRS and US GAAP are not significant, thus, supporting proponents of adoption of IFRS in the US, after which all US publicly traded companies would use IFRS and not US GAAP.

Keywords: International Financial Reporting Standards, IFRS, capital markets, financial reporting

JEL Classification: F23, G15, M41

Suggested Citation

Grossman, Amanda M. and Smith, Murphy and Tervo, Wayne, Measuring the Impact of International Financial Reporting Standards on Market Performance of Publicly Traded Companies. Advances in Accounting, Vol. 29, No. 2, December 2013: 343-349. Available at SSRN: https://ssrn.com/abstract=2113715 or http://dx.doi.org/10.2139/ssrn.2113715

Amanda M. Grossman

Murray State University - Accounting Department ( email )

Murray, KY 42071-3314
United States

Murphy Smith (Contact Author)

Texas A&M University-Corpus Christi-Department of Accounting ( email )

6300 Ocean Dr
Corpus Christi, TX 78412
United States

Wayne Tervo

Murray State University - Accounting Department ( email )

Murray, KY 42071-3314
United States

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