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The study aims to identify whether international financial reporting standards (IFRS) or local generally accepted accounting principles (GAAP) reporting provides investors and senior management of acquirer banks with superior information on target banks under post-merger bank performance.

The authors examine the claim that IFRS improves corporate transparency and increases financial reporting quality in European Bank merger and acquisitions (M&As). The authors compare the financial performance of merged banks where the target and acquirer banks employed the same reporting system (up to 305 merged banks) to the performance of a control group of banks not engaged in M&A activity (up to 1,690 European banks).

Local GAAP reporting allows a more transparent assessment of financial performance using traditional indicators, making it a superior tool for assessing potential acquisition targets.

Overall, the empirical findings are consistent with prior studies and indicate a significant relationship between local GAAP and post-merger performance, while IFRS does not contribute to post-merger bank performance.

The study is one of the very few studies to investigate the relationship between bank performance, M&A activity and accounting standards in EU-28 countries. The primary contribution the finding of poor performance of IFRS reporting merged banks compared to local GAAP banks in EU-28 countries in line with prior results of Huian (2012). In addition, several deal- and bank-specific characteristics that affect accounting standards influence M&A transactions in European banks.

The purpose of this paper is to study the information content of intangible assets under IAS/IFRS when compared to local GAAP for European listed companies.

The paper employs multivariate regression models for a sample of 1,855 European listed firms in a six‐year period, from 2002 to 2004 in local GAAP and from 2005 to 2007 in IAS/IFRS to investigate the empirical relationships between market value of European firms and book value of their intangible assets.

The results suggest that the book value of other intangible assets of European listed firms is higher under IFRS than local GAAP and has more informative value for explaining the price of the share and stock market returns. European investors, however, consider the financial information conveyed by capitalized goodwill to be less relevant under IFRS than with local GAAP. Thus, identified intangible assets capitalized on European company balance sheets provide more value‐relevant information for shareholders than unidentified intangible assets that have been transferred into goodwill, with the exception of Italian and Finnish investors.

The paper adds to the existing literature on IFRS by documenting the association between the market value of European listed firms and the book value of their goodwill and other intangibles assets. The study complements prior studies by demonstrating that country differences persist despite the use of common accounting standards and that legal and regulatory country characteristics as well as market forces could still have a significant impact on the value relevance of accounting data.

The mandatory conversion to IFRS (International Financial Reporting Standards) has represented much more than a change in accounting rules. Firms’ main concerns have been to understand the extent to which accounting differences between national GAAP and IFRS could affect their reported performance. The purpose of this paper is to address this concern by providing empirical evidence of the nature and the size of the differences between Italian accounting principles and IFRS.

The total and individual differences between Italian GAAP and IFRS are identified and quantified in the reconciliations of net income and equity of companies listed on Borsa Italiana. The focus is to show the major consequences of the conversion to IFRS on accounting outcomes.

The empirical results indicate a more relevant total impact of such a transition on net income than equity. The analysis of individual adjustments shows a greater discrepancy between Italian GAAP and IFRS in the accounting treatment of intangible assets, income taxes, and business combinations with reference to both net income and equity.

The main contribution of the paper is to investigate the impact of mandatory IFRS adoption for Italian listed companies’ financial results. Previous literature does not focus on such a specific country, but it offers a comparative approach to different effects of IFRS on European countries.

This study aims to examine the implementation of International Financial Reporting Standards (IFRS) in Saudi Arabia. It investigates how the adoption of IFRS has affected four critical areas in the financial statements of publicly listed companies: profit and loss statement, balance sheet, cash flow statement and retained equity statement in Saudi Arabia. The paper also explores the essential factors/drivers that influence the adoption of IFRS and its implication in Saudi Arabia.

Data was obtained from Saudi Stock Exchange (Tadawul) listed companies from eleven industries in Saudi Arabia. This cross-sectional study analyses critical financial data across eleven distinctive industries. To identify the impact of adopting IFRS, the researchers use a paired t-test to evaluate seven key elements of financial statements underlying the critical areas: non-current asset, current asset, total assets, shareholders equity, non-current liability, current liability and total liability. The sample captures cross-sectional data from well-developed global industries in Saudi Arabia, pre- and post-implementation of IFRS. Thus, the analysis of the sample data gives a representative picture of the population of the Saudi Arabian industry.

The results reveal significant differences between GAAP and IFRS reporting standards in the measurement, recognition and classification of non-current assets and liabilities. The differences are expressed in the variance between the GAAP and IFRS. Specifically, the differences between GAAP and IFRS demonstrated by the t-value are significant and reliable (respectively, 5.3 and 4.1). Additionally, the t-value is validated by the p-value, which in both was significant.

The outcomes of this research will benefit accounting information users, practitioners, researchers and regulators. Since Saudi Arabia’s policymakers have mandated the full adoption of IFRS in financial reporting, the study contributes to the adoption of IFRS practices throughout the Saudi industry. Adopting full IFRS standards requires widespread IFRS expertise to cope with the transition.

This study advances research into the perennial issues associated with changes in reporting towards IFRS standards, especially in Saudi Arabia. The contribution to theory and practice enters new and fruitful areas.

The purpose of this paper is to provide an updated picture of the convergence process between International Financial Reporting Standards (IFRS) and United States Generally Accepted Accounting Principles (US GAAP), with IFRS clearly emerging as a global financial reporting benchmark. This study is aimed at evaluating the main benefits but also some significant issues arising from the adoption of a single set of accounting standards.

The main examples of theoretical and empirical literature for and against IFRS implementation are reviewed.

Since markets became increasingly global, the comparability of financial statements is required to enable better corporate communication and transparency to the advantage of all stakeholders. The main difficulties of IFRS adoption by the USA are explored.

The study’s implications are to emphasize the practical obstacles to resolving the issues of financial communication through a uniform set of standards, by highlighting the importance of taking into account other dynamics in improving the corporate disclosure domestically and globally.

The key contribution of this study is to reflect on the best ways to reach global communication without sacrificing the effectiveness and affordability of financial reporting.

The purpose of this study is to reveal the effect on earnings quality of switching to International Financial Reporting Standards (IFRS) from Turkish generally accepted accounting principles (GAAP) by comparing two sets of financial statements based on Turkish GAAP and IFRS.

This study is based on mathematical modeling. The variables (total assets, net income, total accruals, cash receivables, return on assets and size) in the models are core to the quantitative research that examines the relationship between them. In this study, the total accruals are computed based on the indirect approach, and the prediction error of the model represents discretionary accruals that reflect earnings management. The data set includes financial data prepared under IFRS and Turkish GAAP. The univariate and multivariate analyses are conducted by SPSS.

The results of this study indicate that IFRS does not cause any significant differences in total assets, but the net income under IFRS is larger compared to that under the Turkish GAAP. It is also found that while there is no significant difference in total accruals, there is a difference in discretionary accruals. In other words, Turkish firms use income-reducing discretionary accruals when adopting IFRS.

This study provides more insights into the effect of IFRS on earnings quality. It also provides evidence of the effect of accounting culture on IFRS adoption. As a code-law country in Turkey, publicly traded firms have to prepare financial statements based on both Turkish GAAP, which is rule-based and restricts management decisions with strict rules, and the principle-based IFRS which leaves more room to manipulate. To the authors’ knowledge, this is the first study that reveals the effect of accounting standards on earnings management by comparing two sets of financials of the same period prepared under different standards.

This paper aims to examine whether sanctioning adoption of IFRS for US firms would produce accounting information of the same quality as those produced under US Generally Accepted Accounting Principles (GAAP). This is a timely research since the Securities and Exchange Commission (SEC; 2014) has asked for further review.

This study uses restatements of financial statements made by a sample of foreign firms listed on US stock exchanges using International Financial Reporting Standards (IFRS) in comparison to a control sample of US firms using US GAAP during the period of 2001to 2010. Statistical analysis of the frequency, sources and magnitude of the restatements and market revaluations to the announcement of the restatements are examined. Cross-country differences are also examined.

The results indicate that IFRS firms have a lower rate of restatements than US GAAP firms but with no significant differences in terms of sources of restatements and the impact on net income or shareholders’ equity. The market revaluations to restatement announcements show no significant differences between the two accounting regimes. Cross-sectional analyses indicate IFRS firms are on average from countries characterized by weak rule of law, ineffective corruption controls and lower efforts to promote private sector advancement.

The sample size in the paper is relatively small. To increase validity of the inferences from the Results, this issue should be readdressed with larger sample.

Results are important to accounting practitioners and policymakers.

Results are contributing in clarifying the SEC’s concerns of adopting the IFRS by US-based firms; thus, saving the investors the additional efforts and costs in comparing financial statements prepared under different accounting regimes.

This research is the first to use restatements as accounting quality criteria. The results suggest that adoption of IFRS by US-based firms would not produce accounting information that is significantly different in quality from those generated under US GAAP. This result should be of interest to the SEC in clarifying its concerns.

The purpose of this paper is to add to the literature on accounting change in explaining a decade-long effort by the FASB and IASB to develop a set of global accounting standards accepted by markets worldwide. This research studies the effort as one of “convergence” in accounting standards and aims to bring theoretical and empirical clarity as to how we can conceptualize the notion of convergence.

Through a longitudinal study of 23 key FASB-IASB projects undertaken between 2002 and 2011, this paper analyzes processes of accounting change using a blend of institutional theory and political economy. A process perspective provides a method to unfold variants of accounting change by identifying patterns that help us to understand the conditions for and characteristics of convergence.

The author highlights specific variants of accounting change observed during the convergence effort – direct emulation, difference reduction and progressive redesign – as analogous to institutional processes. Where direct emulation and difference reduction reflect institutional processes of imitation and editing or translation, respectively, the author shows how progressive redesign of accounting standards goes beyond these classical categorizations to encompass the notion of “institutional co-construction” (Djelic, 2008).

A longer (shorter) period of study and a greater (lesser) number of projects could be argued for a more comprehensive (more detailed) study; however, limiting the period and project to the terms of the formal convergence program allows for forces driving this particular process to be isolated and their effects extrapolated to broader thinking on accounting and global regulation.

This research informs the global standard-setting community of the evolution of convergence and the factors which impact that evolution by revealing the influence of various institutions, actors and events over time. In particular, the author identifies the impact of the competitive and cooperative conditions under which the FASB-IASB convergence effort operated and reveal how these conditions were influenced by the macro-level economic and political developments occurring over the period.

The purpose of this paper is to examine two channels through which accounting standard differences could affect cross-listing: compliance costs and/or comparability benefits.

The authors use two settings to disentangle the two channels. First, financial reporting requirements are more stringent for cross-listings via direct listings than cross-listings via depositary receipts; as a result, the effect of compliance costs (if any) would be manifested differently in the two venues of cross-listings. Second, some host countries allow foreign firms to report under International Financial Reporting Standards (IFRS) without mandating IFRS for domestic firms; compared to host countries that mandate IFRS for both domestic and foreign firms, these IFRS-permitting countries provide a setting to test the importance of comparability benefits while holding constant compliance costs.

The authors find that prior to IFRS adoption, direct listings decrease with accounting standards differences between two countries while depositary receipts increase with such differences, consistent with the costs of complying with host country’s accounting standards affecting firms’ cross-listing decisions. After the harmonization of accounting standards, the authors find that IFRS-mandating host countries gain cross-listings from other IFRS-mandating jurisdictions, while IFRS-permitting countries do not experience such gains. These combined results suggest that accounting related compliance costs and comparability benefits both influence cross-listing decisions.

The paper employs unique settings that enable an in-depth examination of the role of compliance costs vs that of comparability benefits on cross-listing decisions. The settings employed by the authors allow them to disentangle the two channels and provide an important insight that accounting standard-related compliance costs and comparability benefits both affect cross-listing decisions.