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Author: Jennifer Yardley
Publisher:
ISBN:
Category : Accounting
Languages : en
Pages : 112
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Book Description
The rise of International Financial Reporting Standards (IFRS) as a contender to be the single globally-accepted set of accounting standards has been accompanied by a wealth of research studying the consequences of IFRS adoption. However, prior research does little to address the potential effects of and market sentiment toward the use of IFRS rather than U.S. GAAP in the United States. This study fills this gap by examining the accounting standard choices of foreign private issuers in the United States. In addition to identifying the factors that are associated with a firm's accounting standard choice in the U.S., this study addresses the capital market reaction to this choice by comparing the value relevance of U.S. GAAP and IFRS financial statements and the trading volume reaction surrounding earnings announcements. Several firm characteristics prove to be significantly related to firms' accounting standard choices in the United States, supporting the idea that firms choosing IFRS or U.S. GAAP are making this decision based on relative costs and benefits. Larger firms that are listed on more exchanges are more likely to use IFRS. Firms are also more likely to use IFRS in the United States when they are required to use IFRS in their country of incorporation. Several other factors are related to accounting standard choice to a lesser extent. Results suggest that the different accounting standards used by these firms is associated with the market reaction to their accounting information. While book value and operating cash flows appear to be more value relevant under U.S. GAAP, earnings are more value relevant under IFRS. Additionally, IFRS financial statements appear to be more value relevant as a whole for foreign private issuers. However, additional tests suggest that these differences in value relevance may be driven by firm characteristics other than accounting standard choice. A firm's accounting standards are also related to the market reaction surrounding the earnings announcement, with firms using IFRS experiencing less abnormal trading volume. Once again, the possibility that these differences in trading volume could be related to other firm characteristics cannot be ruled out. Taken together, the results suggest that IFRS may be just as useful as U.S. GAAP to investors in the United States, if not more so, for foreign private issuers.
Author: Jennifer Yardley
Publisher:
ISBN:
Category : Accounting
Languages : en
Pages : 112
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Book Description
The rise of International Financial Reporting Standards (IFRS) as a contender to be the single globally-accepted set of accounting standards has been accompanied by a wealth of research studying the consequences of IFRS adoption. However, prior research does little to address the potential effects of and market sentiment toward the use of IFRS rather than U.S. GAAP in the United States. This study fills this gap by examining the accounting standard choices of foreign private issuers in the United States. In addition to identifying the factors that are associated with a firm's accounting standard choice in the U.S., this study addresses the capital market reaction to this choice by comparing the value relevance of U.S. GAAP and IFRS financial statements and the trading volume reaction surrounding earnings announcements. Several firm characteristics prove to be significantly related to firms' accounting standard choices in the United States, supporting the idea that firms choosing IFRS or U.S. GAAP are making this decision based on relative costs and benefits. Larger firms that are listed on more exchanges are more likely to use IFRS. Firms are also more likely to use IFRS in the United States when they are required to use IFRS in their country of incorporation. Several other factors are related to accounting standard choice to a lesser extent. Results suggest that the different accounting standards used by these firms is associated with the market reaction to their accounting information. While book value and operating cash flows appear to be more value relevant under U.S. GAAP, earnings are more value relevant under IFRS. Additionally, IFRS financial statements appear to be more value relevant as a whole for foreign private issuers. However, additional tests suggest that these differences in value relevance may be driven by firm characteristics other than accounting standard choice. A firm's accounting standards are also related to the market reaction surrounding the earnings announcement, with firms using IFRS experiencing less abnormal trading volume. Once again, the possibility that these differences in trading volume could be related to other firm characteristics cannot be ruled out. Taken together, the results suggest that IFRS may be just as useful as U.S. GAAP to investors in the United States, if not more so, for foreign private issuers.
Author: Nicolas Michael Zur Nieden
Publisher:
ISBN:
Category :
Languages : en
Pages : 117
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Book Description
Author: Jenice J. Prather-Kinsey
Publisher:
ISBN:
Category :
Languages : en
Pages : 47
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Book Description
The objective of our study is to test whether the adoption of International Financial Reporting Standards (IFRS) in the United States (U.S.) is perceived positively by American Depository Receipt (ADR) firms' equity market participants. We conduct our tests by studying market reactions to the Securities and Exchange Commission's (SEC) IFRS-related press releases between 2007 and 2011 regarding potential adoption of IFRS in the U.S. Using a sample of ADR firms and multivariate regression analyses, we test the 3-day cumulative abnormal returns (CAR) of investors of ADR firms in response to SEC announcements on potential IFRS adoption. We find a significant and positive market reaction to the SEC's announcements related to the potential adoption of IFRS in the U.S. for ADR firms reporting their financial statements using IFRS, especially in the industry where IFRS is the globally predominant accounting standard. Conversely, we find a significantly negative market reaction to SEC related announcements of potential adoption of IFRS in the U.S. for ADR firms currently reporting their financial statements using U.S. generally accepted accounting principles (GAAP). We conclude that the SEC's adoption of IFRS may benefit global and U.S. equity market participants relative to Local GAAP reporting (reporting using domestic GAAP that is not IFRS or U.S. GAAP) by providing a common basis for investors, issuers and others to evaluate investment opportunities.
Author: Ulf Brüggemann
Publisher: Springer Science & Business Media
ISBN: 3834969524
Category : Business & Economics
Languages : en
Pages : 162
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Book Description
Ulf Brüggemann discusses and empirically investigates the economic consequences of mandatory switch to IFRS. He provides evidence that cross-border investments by individual investors increased following the introduction of IFRS.
Author: Edith Leung
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This paper examines the stock market reaction to 15 events relating to IFRS adoption in the United States. The goal is to assess whether investors perceive the switch to IFRS as beneficial or costly. Our findings suggest that investors' reaction to IFRS adoption is more positive in cases where IFRS is expected to lead to convergence benefits. Our results also indicate a less positive market reaction for firms with higher litigation risk, which is consistent with investors' concerns about greater discretion and less implementation guidance under IFRS for these firms. Overall, the findings are relevant to the current debate on IFRS adoption in the U.S. and highlight the importance of convergence to investors.
Author: Jens Adolf
Publisher:
ISBN:
Category :
Languages : en
Pages : 80
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Book Description
Author: Luzi Hail
Publisher:
ISBN:
Category :
Languages : en
Pages : 104
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Book Description
Drawing on the academic literature in accounting, finance and economics, we analyze economic and policy factors related to the potential adoption of International Financial Reporting Standards (IFRS) in the U.S. We highlight the unique institutional features of U.S. markets to assess the potential impact of IFRS adoption on the quality and comparability of U.S. reporting practices, the ensuing capital market effects, and the potential costs of switching from U.S. GAAP to IFRS. We discuss the compatibility of IFRS with the current U.S. regulatory and legal environment as well as the possible effects of IFRS adoption on the U.S. economy as a whole. We also consider how a switch to IFRS may affect worldwide competition among accounting standards and standard setters, and discuss the political ramifications of such a decision on the standard setting process and on the governance structure of the International Accounting Standards Board. Our analysis shows that the decision to adopt IFRS mainly involves a cost-benefit tradeoff between (1) recurring, albeit modest, comparability benefits for investors, (2) recurring future cost savings that will largely accrue to multinational companies, and (3) one-time transition costs borne by all firms and the U.S. economy as a whole, including those from adjustments to U.S. institutions. We conclude by outlining several possible scenarios for the future of U.S. accounting standards, ranging from maintaining U.S. GAAP, letting firms decide whether and when to adopt IFRS, to the creation of a competing U.S. GAAP-based set of global accounting standards that could serve as an alternative to IFRS.
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Author: David Anthony Procházka
Publisher:
ISBN:
Category :
Languages : en
Pages : 11
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Book Description
From 2005, the EU listed companies are obliged to prepare their consolidated financial statements in conformity with IFRS, which are viewed as high-quality financial standards (Leuz, 2003). To comply with the increased disclosure requirements, companies have to incur significant costs. However, the benefits from harmonised financial reporting are available only to those entities, which have serious incentives to report transparently (Daske et al., 2013). The benefits and costs following the changeover to IFRS are therefore neither unfolded equally across companies, nor countries. Empirical research (e.g. Lee et al., 2008; Christensen et al., 2013) reveals that the shortcomings in institutional setting may close off all potential benefits from harmonised accounting, which is pertinent mainly for the transition countries. The aim of this paper is to identify absolute and relative winners and losers among the new EU member states in terms of the progression of their capital market. The particular focus is put on the capital market size measured by a simple criterion “number of listed companies” and its changes in transitional and post-adoption period. The splitting of time-series into two subsets enables to eliminate the influence of different reporting incentives from the effects of change in reporting regime. As an unintended result, the paper's empirical findings raise some doubts about the appropriateness of certain research designs for assessing the economic consequences of mandatory IFRS adoption.
Author: Arber H. Hoti
Publisher:
ISBN:
Category :
Languages : en
Pages : 8
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Book Description
In order to explain the effects of early adoption of International Standards of Financial Reporting (IFRS) in the US capital markets we have done the research in terms of its effect on the main stakeholders such as equity holders, managers, audit industry, creditors, academics and regulatory authorities such as Securities and Exchange Commission (SEC). The research results indicate that large size US listed companies should take the advantage of early-adoption of the IFRS.
