Comparisons on selected ratios between IFRS and US GAAP companies
Abstract
Purpose
The purpose of this paper is to provide evidence of the effect of the differences related to reporting inventory, property plant and equipment, intangible assets, and development costs between International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (US GAAP) companies.
Design/methodology/approach
Both univariate tests (t‐tests) and multivariate tests (ANOVA, probit and logit analyses) are used to compare the ratios between IFRS and US GAAP companies.
Findings
Results consistently show that IFRS‐country firms have a significantly higher current ratio, a significantly lower asset turnover ratio, and a significantly lower debt‐to‐asset ratio.
Research limitations/implications
This paper only focuses on inventory, property plant and equipment, intangible assets, and development costs. Other financial variables are not considered.
Practical implications
The results are useful for individuals who are interested in reporting and investing in countries using different financial reporting systems.
Originality/value
This paper is a timely examination of the recent emphasis of mandating IFRS.
Keywords
Citation
Bao, D., Lee, J. and Romeo, G. (2010), "Comparisons on selected ratios between IFRS and US GAAP companies", Journal of Financial Reporting and Accounting, Vol. 8 No. 1, pp. 22-34. https://doi.org/10.1108/19852511011055925
Publisher
:Emerald Group Publishing Limited
Copyright © 2010, Emerald Group Publishing Limited