The studies that have been conducted so far show some mixed evidence with regard to the quality between the IFRS and the US GAAP. The study was conducted with relation to the high tech firms in Germany. These firms were until now following the US GAAP and were required to switch to IFRS. The study concluded that the IFRS had exhibited more amount of earnings management and involves less timely loss recognition and had a lower value relevance after considering the factors that were specific to the firms and other such varying factors. The changes from the US GAAP to IFRS ix expected to affect the accounting quality and it is estimated that the same will be deteriorate over time.
The adoption of both the IFRS and the convergence between the US GAAP and IFRS is expected to have the increased comparability of the financial statements and it was concluded that the adoption of the same would have an incremental effect on the increased comparability beyond convergence. Further, the study resulted in the following findings:
1. The adoption of IFRS will prove to be more costly
2. The adoption may not be the only option that is available since many of the countries have also required the firms to prepare the financial statements using IFRS and some of them have required to converge the 2 stated standards in order to achieve comparability.
1. Switching to IFRS will help the investors in comparing the financial statements of one company with another ta the international level.
2. The IFRS is internationally understood
3. IFRS will help the companies in staying updated with what is happening in the competitive world.
business.fiu.edu, (2015). Relative Benefits of Adoption of IFRS and Convergence between IFRS and U.S. GAAP: Evidence from Germany. Retrieved 7 March 2015, from https://business.fiu.edu/soa/pdf/Riccardi%20Adoption%20vs%20convergence_LRW_FIU.pdf
Jennings, M. (2008). Why Switch to IFRS from GAAP? The Summa. Retrieved 7 March 2015, from https://profalbrecht.wordpress.com/2008/12/20/why-switch-to-ifrs-from-gaap/
research.mbs.ac.uk, (2015). Does Accounting Quality Change Following a Switch from U.S. GAAP to IFRS? Evidence from Germany. Retrieved 7 March 2015, from https://research.mbs.ac.uk/accounting-finance/Portals/0/docs/Does%20Accounting%20Quality%20Change%20Following%20a%20Switch.pdf
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