International Financial Reporting Standards (IFRS): Pros and Cons for Investors

Accounting and Business Research, Forthcoming

65 Pages Posted: 13 Sep 2006

See all articles by Ray Ball

Ray Ball

University of Chicago - Booth School of Business


Accounting in shaped by economic and political forces. It follows that increased worldwide integration of both markets and politics (driven by reductions in communications and information processing costs) makes increased integration of financial reporting standards and practice almost inevitable. But most market and political forces will remain local for the foreseeable future, so it is unclear how much convergence in actual financial reporting practice will (or should) occur. Furthermore, there is little settled theory or evidence on which to build an assessment of the advantages and disadvantages of uniform accounting rules within a country, let alone internationally. The pros and cons of IFRS therefore are somewhat conjectural, the unbridled enthusiasm of allegedly altruistic proponents notwithstanding. On the "pro" side of the ledger, I conclude that extraordinary success has been achieved in developing a comprehensive set of "high quality" IFRS standards, in persuading almost 100 countries to adopt them, and in obtaining convergence in standards with important non-adopters (notably, the U.S.). On the "con" side, I envisage problems with the current fascination of the IASB (and the FASB) with "fair value accounting." A deeper concern is that there inevitably will be substantial differences among countries in implementation of IFRS, which now risk being concealed by a veneer of uniformity. The notion that uniform standards alone will produce uniform financial reporting seems naive. In addition, I express several longer run concerns. Time will tell.

Keywords: International accounting standards, IAS, IFRS, fair value accounting

JEL Classification: F02, F39, G15, M41, M44, M47, N20

Suggested Citation

Ball, Ray, International Financial Reporting Standards (IFRS): Pros and Cons for Investors. Accounting and Business Research, Forthcoming, Available at SSRN:

Ray Ball (Contact Author)

University of Chicago - Booth School of Business ( email )

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