Why does the US want to adopt the IFRS?
by Hossein Nouri; Abdus Shahid
International Journal of Economics and Accounting (IJEA), Vol. 3, No. 2, 2012

Abstract: The purpose of this paper is to investigate the implications of an adoption of IFRS in the USA on companies' earnings and on stock prices. This paper reviews literature on previous accounting changes in the USA and their impacts on stock price, 20-F reconciliations that show higher income under IFRS than US GAAP, as well as a recent study conducted in Europe after its adoption of IFRS. The review of literature indicates that the effect of IFRS adoption in the US market could be negligible and would be firm's specific. While IFRS adoption could decrease the stock prices of some companies (e.g., those switching from LIFO to another acceptable inventory valuation method), it would increase the stock prices of some other companies (e.g., those that will experience a decline in the cost of equity). This paper also attempts to answer the question why SEC is pursuing a change to IFRS from US GAAP if IFRS adoption could have negligible impact on capital market. The study concludes that the adoption of IFRS in the USA is a political, economical, and social process and not one based on rational and logical decision-making.

Online publication date: Wed, 06-Aug-2014

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Economics and Accounting (IJEA):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com