How to measure the comparability of financial statements? Online publication date: Tue, 19-May-2009
by Vicky Cole, Joel Branson, Diane Breesch
International Journal of Managerial and Financial Accounting (IJMFA), Vol. 1, No. 4, 2009
Abstract: Since 2005, listed EU companies apply IFRS to prepare their consolidated financial statements. Users might get the impression that these financial statements are comparable now. However, differences in application of IFRS still exist. These differences can have a negative impact on the comparability of the financial statements. Therefore, the implementation of IFRS has not eliminated the need for research concerning the comparability of financial statements. The purpose of this article is to assist researchers in choosing the most appropriate method to measure this comparability. First the article discusses the concept of comparability. Second, important properties of measurement methods are discussed. Next, the H, C, I, V and T index and three statistical models are analysed. Finally, the article gives an illustration of choosing a method to measure the comparability of the consolidated financial statements of the EU listed companies.
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