So Similar, yet So Different: Comparing the US GAAP and IFRS Experience at Eliciting Greater Transparency on Pension Asset Disclosures

2020 ◽  
Author(s):  
Divya Anantharaman ◽  
Elizabeth Chuk
Keyword(s):  
The Us ◽  
Pension Asset ◽  
Us Gaap

Accounting Standards and Earnings Quality — Evidence from Registered ADRs

2018 ◽  
Vol 21 (04) ◽  
pp. 1850022
Author(s):  
Yaseen S. Alhaj-Yaseen ◽  
Kean Wu ◽  
Leslie B. Fletcher
Keyword(s):  
Financial Reporting ◽  
Earnings Quality ◽  
Accounting Standards ◽  
Securities And Exchange Commission ◽  
High Quality ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
The Us ◽  
Us Gaap

This paper examines the changes in earnings quality of registered American Depositary Receipts (ADRs) as a result of switching accounting standards. We aim to shed light on the potential impact of International Financial Reporting Standard (IFRS) adoption on US firms. A suboptimal approach to achieve this goal is through examination of US firms’ surrogates such as ADRs. Unlike previous studies, we made a distinction between registered and unregistered ADRs and affirmed that registered ADRs are the closest surrogates with which to conduct our analysis because they are exclusively required to adhere to the Securities and Exchange Commission (SEC)’s stringent disclosure requirements. When cross-listing their equity on the US exchanges, foreign issuers can file their financial reports with the SEC using IFRS, US GAAP (generally accepted accounting principles), or their domestic GAAP with reconciliation to US GAAP. An improvement in earnings quality is documented when ADRs adopt US GAAP or IFRS versus domestic GAAP. However, when the comparison is made between US GAAP and IFRS, no difference in earnings quality is documented. These results indicate that switching to high-quality accounting standards is likely to improve earnings quality. This improvement is maximized when the difference between reporting standards is high and minimized if otherwise. Our conclusion is that the adoption of IFRS in the US is unlikely to change earnings quality of local issuers. Moreover, we drew a distinction between reconciliation with and adoption of high-quality accountings standards and find that while the former can enhance earnings quality, the latter can further improve it.

Convergence between US GAAP and IFRS: Acceptance of IFRS by the US Securities and Exchange Commission (SEC)

2007 ◽  
Vol 4 (2) ◽  
pp. 123-139 ◽  
Author(s):  
Holger Erchinger ◽  
Winfried Melcher
Keyword(s):  
Securities And Exchange Commission ◽  
The Us ◽  
Us Gaap

scholarly journals Development of the common standard for revenue recording as a part of the US GAAP and IAS/IFRS systems convergence

2009 ◽  
Vol 57 (6) ◽  
pp. 29-44
Author(s):  
Hana Bohušová
Keyword(s):  
Comparative Analysis ◽  
Revenue Recognition ◽  
New Approach ◽  
Joint Project ◽  
Starting Point ◽  
Significant Difference ◽  
The Us ◽  
Limited Application ◽  
General Standard ◽  
Us Gaap

The most significant difference between US GAAP and IFRSs is in the area of general approach. IFRSs are based on basic accounting principles1 with limited application guidance, US GAAPs are based especially on rules with specific application guidance. FASB and IASB initiated their joint project on revenue recording to converge IFRS and US GAAP in this area. The main objective of this paper is comparative analysis of revenue recognition under both systems, evaluation of the most significant differences in revenue recognition and measurements as a starting point for the preparation of the new general standard for revenue recognition and the new approach to the revenue recognition development.In this paper, the current approaches to revenue recognition under both systems are compared. The most significant difference is the general approach to revenue recognition. There is the Conceptual Framework where revenue is defined, two standards on revenue recognition and interpretations concerning revenue recognition and measurement in the IAS/IFRS. On the other hand, there are many standards and guidance concerning revenue in the US GAAP. Revenue is defined in the Statements of Financial Accounting concepts (CON 5, CON 6). There is not any general standard for revenue recognition under the US GAAP. The most significant differences in revenue recognition concern the long-term contracts and deferred payments. Despite this difference, there are many similarities between both systems.Based on the results of the comparative analysis which was done in the paper, a new approach for re­ve­nue recognition based on principles for the new general standard for revenue recognition common for both systems is being developed.

IFRS and value relevance: evidence based on Canadian adoption

2016 ◽  
Vol 12 (2) ◽  
pp. 136-160 ◽  
Author(s):  
Oliver N. Okafor ◽  
Mark Anderson ◽  
Hussein Warsame
Keyword(s):  
Empirical Evidence ◽  
Financial Reporting ◽  
Value Relevance ◽  
Accounting Information ◽  
Sensitivity Analyses ◽  
Evidence Based ◽  
Content Type ◽  
Ifrs Adoption ◽  
The Us ◽  
Us Gaap

Purpose – The purpose of this paper is to investigate whether financial information prepared and disclosed under International Financial Reporting Standards (IFRS) has incremental value relevance vs information prepared under generally accepted accounting principles (GAAP) in Canada. Design/methodology/approach – The authors employ a difference in differences methodology and estimate value relevance using: first, the adjusted R2 of regressions of stock price on book value and earnings; second, the adjusted R2 of regressions of stock returns on earnings and changes in earnings; and third, a time series incremental association return estimation. The authors use multiple models including a model similar to the Ohlson (1995) model and a modified Balachandran and Mohanram (2011) model to investigate value relevance in the period 2008-2013. Findings – The authors provide empirical evidence, based on unique Canadian environment, that accounting information prepared and disclosed under IFRS exhibits higher price and returns value relevance than accounting information prepared previously under local GAAP. Sensitivity analyses and yearly trends regressions produce collaborating evidence. Originality/value – The study provides early empirical evidence that value relevance increases in mandatory IFRS adoption, based on unique Canadian adoption. The Canadian adoption is unique because Canada: first, is the first G7 non-European country to adopt IFRS; second, had pursued a dual strategy of harmonizing with the US GAAP while supporting IFRS convergence; third, provided information environment that mitigates the problems associated with measuring the effects of IFRS adoption in the European countries where IFRS or its predecessor – international accounting standards – had permeated the reporting environment prior to the mandatory adoption in 2005; and fourth, allowed firms listed on the US exchanges to continue to use or adopt the US GAAP for financial reporting and thus, provided a group of benchmark firms drawn from the same social-political and economic environment as the treatment firms. The study clarifies prior inconsistent results from European samples.

Impact of ADR Forms 20-F reconciliation on trading volume

2015 ◽  
Vol 23 (3) ◽  
pp. 253-270
Author(s):  
David L. Senteney ◽  
Grace H. Gao ◽  
Mohammad S. Bazaz
Keyword(s):  
Abnormal Return ◽  
Trading Volume ◽  
Home Country ◽  
Abnormal Returns ◽  
Stock Exchanges ◽  
Short Term ◽  
Content Type ◽  
Accounting Principles ◽  
The Us ◽  
Us Gaap

Purpose – This paper aims to investigate the impact of the filing of Form 20-F to the Securities and Exchange Commission (SEC) on short-term trading volume and return by those foreign firms which list their securities in the US Stock Exchanges. Design/methodology/approach – The authors collected 402 American depository receipt (ADR) firms from 38 different countries that listed their securities in the US Stock Exchanges over a 10-year period of 2000-2009. A regression model was used to examine such impact, including the post year 2007 SEC elimination of reconciliation. Findings – This paper found significant abnormal trading volumes and abnormal returns one day, two days and three days following the 20-F report for the sample firms whose financial statements were prepared under both home-country accounting principles and US generally accepted accounting principles (GAAP). Firms originally using international financial reporting standards (IFRS) do not present abnormal return and abnormal trading volume. This indicates that US investors view IFRS to be as high-quality as US GAAP. Research limitations/implications – The findings might be limited to this period and might not draw statistical inference for the future period. This evidence offers support for the SEC’s elimination of the reconciliation requirement to US GAAP. Practical implications – This study was carried out with the aim to investigate whether the release of Form 20-F by ADR firms offers any additional information useful to investors incorporating both abnormal return and trading volume, which is thought to be more sensitive. Originality/value – This paper investigates the short-term return and volume reactions caused by the earnings and equity reconciliation from home-country accounting standards or IFRS to US GAAP for foreign cross-listed firms in the USA.

Have ‘European’ and US GAAP measures of income and equity converged under IFRS? Evidence from European companies listed in the US

2009 ◽  
Vol 39 (5) ◽  
pp. 431-447 ◽  
Author(s):  
Sidney J. Gray ◽  
Cheryl L. Linthicum ◽  
Donna L. Street
Keyword(s):  
The Us ◽  
Us Gaap

scholarly journals Adopting US-GAAP Or IASB Accounting Standards By The Arab Countries

2011 ◽  
Vol 3 (10) ◽  
Author(s):  
Taisier A. Zoubi ◽  
Osamah Al-Khazali
Keyword(s):  
Positive Impact ◽  
Arab World ◽  
Accounting Standards ◽  
Arab Countries ◽  
Financial Accounting ◽  
International Accounting Standards ◽  
Financial Position ◽  
The Us ◽  
Accounting Rules ◽  
Us Gaap

This paper examines whether Arab countries have adopted the standards issued by the International Accounting Standards Board (lASB) or the US-GAAP. The results of this study show that companies in the Arab world use different accounting rules and regulations for measurement, recognition, and disclosures of financial position and results of operation. Consequently, comparability of the financial results of different companies in different countries in the Arab world is impaired. We recommend adopting financial accounting standards issued by the IASB. Our study shows that adopting IASB standards has a positive impact on the economic development of the Arab countries.

scholarly journals IFRS: Approaching A State Of Convergence

2011 ◽  
Vol 6 (12) ◽  
Author(s):  
Joseph M. Ragan ◽  
Andrew J. Hadley ◽  
Alexander P. Raymond
Keyword(s):  
Accounting Standards ◽  
Financial Statement ◽  
Revenue Recognition ◽  
International Firms ◽  
Reporting Requirements ◽  
The Us ◽  
Areas Of Concern ◽  
Us Gaap

In this paper we will discuss the underlying differences that currently exist between IFRS and US GAAP. Our paper is presented with the belief that convergence is within reach at this point, and no longer an unfeasible event. The systematic rules-based approach and the conceptual principles-based approach are important models for this paper, and we refer to them when discussing the differences and developing our beliefs. The differences that we have chosen to discuss are ones, we feel, that could lead to comparability complications once IFRS is acceptable among US firms and International firms with US subsidiaries. Areas of concern involve items regarding financial statement presentation, revenue recognition, expense recognition, assets, and liabilities. Although there are a great deal of similarities between the US GAAP and IFRS reporting requirements, the specific items presented within this paper need to be addressed before commonly accepted accounting standards are used among encompassing countries.

scholarly journals A Case Study Of The Cash Flow Statement: US GAAP Conversion To IFRS

2016 ◽  
Vol 12 (1) ◽  
pp. 1-6
Author(s):  
Peter Harris
Keyword(s):  
Cash Flow ◽  
The United States ◽  
Current Test ◽  
The Us ◽  
Cpa Exam ◽  
Accounting Rules ◽  
Transformation Stage ◽  
Cash Flow Statement ◽  
Us Gaap

International Reporting Standards (IFRS) has become the required framework for most of the world financial markets effective on January 1, 2011. The United States is in a transformation stage, and it has not yet been determined when the US will adopt IFRS. The introduction of IFRS accounting rules into the curriculum is valuable because it presents an alternative method of accounting which can be used to heighten students understanding of GAAP. At present, the CPA Uniform CPA exam is testing IFRS and its testing content is increasing with each current test. Additionally, the CFA exam tests IFRS exclusively and has eliminated US GAAP from its curriculum, basing its action on the fact that the CFA examination is a global based exam. This case requires students to prepare an IFRS cash Flow Statement from a presented US GAAP presented Statement of Cash Flow, from a given set of facts in the case. This case study can be used at the undergraduate or graduate level. It is most suitable for Intermediate Accounting 2, Accounting Theory, Financial Statement Analysis, and an Accounting Capstone classes. Students must have or develop a solid understanding of both US GAAP and IFRS rules is required to adequately address this cash flow case study. 

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