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Contemporary Accounting Research Vol. 36 No. 2 2019

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

Steve Lin1; William Riccardi2; Changjiang Wang3; Patrick E. Hopkins4; Gary Kabureck

1 Florida International University · 2 University at Albany, SUNY · 3 University of Cincinnati · 4 Indiana University Bloomington

open access

Abstract

One of the primary objectives of both adoption of IFRS and convergence between IFRS and 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.

DOI
10.1111/1911-3846.12475
Volume
36
Issue
2
Pages
588-628
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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