Relative Effects of IFRS Adoption and IFRS Convergence on Financial Statement Comparability

54 Pages Posted: 21 Apr 2017 Last revised: 2 May 2017

See all articles by Steve W. J. Lin

Steve W. J. Lin

Florida International University (FIU) - School of Accounting

William Riccardi

University at Albany - SUNY

Changjiang (John) Wang

University of Cincinnati - Department of Accounting

Date Written: 2017

Abstract

One of the primary objectives of both adoption of International Financial Reporting Standards (IFRS) and convergence between IFRS and U.S. Generally Accepted Accounting Principles (U.S. GAAP) is to increase financial statement comparability. Using a unique setting in Germany, we compare the effectiveness of these two approaches in achieving this desired outcome. Our empirical tests show that both adoption and convergence lead to an increase in comparability after the new enforcement regulation in 2005. However, difference-in-differences tests show that adoption does not lead to a significant incremental increase in comparability beyond convergence. The findings of this study should be of interest to regulators and standard-setters as they assess alternative methods of aligning domestic standards with IFRS.

Keywords: IFRS Adoption; Convergence; Comparability

Suggested Citation

Lin, Steve W. J. and Riccardi, William and Wang, Changjiang (John), Relative Effects of IFRS Adoption and IFRS Convergence on Financial Statement Comparability (2017). Available at SSRN: https://ssrn.com/abstract=2956076 or http://dx.doi.org/10.2139/ssrn.2956076

Steve W. J. Lin

Florida International University (FIU) - School of Accounting ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

William Riccardi (Contact Author)

University at Albany - SUNY ( email )

1400 Washington Avenue
Building, Room 109
Albany, NY 12222
United States

Changjiang (John) Wang

University of Cincinnati - Department of Accounting ( email )

Cincinnati, OH 45221-0211
United States

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