Title: International Financial Reporting Standards and diversity in performance measures

Authors: Chunyan Li, Bikki Jaggi

Addresses: Accounting Department, Lubin School of Business, Pace University, 861 Bedford Rd., Pleasantville, NY 10570, USA. ' Rutgers Business School, Rutgers University, Janice H. Levin Building, 94 Rockefeller Road, Piscataway, NJ 08854, USA

Abstract: This paper examines whether the use of International Financial Reporting Standards (IFRSs) by firms across countries reduces diversity in the accounting performance measures. It also examines whether the revision of IFRSs in 1995 reduced diversity in the performance measures. We used earnings and cash flows in both cross-sectional and temporal comparative analyses of firms from eight countries. We find reduced differences in the performance measures of firms using IFRSs compared with firms using domestic GAAP. This reduced diversity is especially evident for IFRSs after 1995, even after controlling for increased similarity in international reported earnings. These results thus indicate that the use of IFRSs reduces diversity in the performance measures and enhances comparability of firm evaluation across countries.

Keywords: International Financial Reporting Standards; IFRS; international accounting; performance measures; domestic GAAP; cross-country analysis; diversity; convergence; earnings; cash flows.

DOI: 10.1504/JGBA.2009.023095

Journal for Global Business Advancement, 2009 Vol.2 No.1/2, pp.76 - 99

Published online: 09 Feb 2009 *

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