Attribute differences between USGAAP and IFRS earnings: An exploratory study.

With the successful completion of the IASC's standards, IFRS and US GAAP were placed as the two pre-eminent world financial reporting frameworks. For years, however, US GAAP was accepted widely as the international set of standards to ensure high quality financial statements. Especially in the US, but also elsewhere, the introduction of IFRS has lead to a discussion on the (relative) quality of both regimes. However, relatively little research has been devoted to the subject. In this study, we address that void and further compare the quality of the two standard regimes using a sample of German New Market firms. Financial statement quality is measured applying multiple earnings attributes traditionally used in accounting research. Consistently throughout our measures, we find that the quality of US GAAP prepared financial statements and IFRS information is overall very comparable. Only with regard to predictive ability of accounting information do we find US GAAP superiority.Accounting; Accounting regime; Earnings attributes; Earnings quality; Selection bias; Studies;

Differences in audit quality between audit firms: The impact of audit-firm portfolio characteristics.

Companies generate financial statements that are used for decision making by various stakeholders and the quality of those financial statements depends on the quality of the external auditor. There exists empirical evidence of quality differentiation between audit firms, but the audit-quality proxy that is typically used, auditor size (big 6 / non-big 6 firm), is very rough. The major purpose and contribution of this paper is to further investigate audit-quality determinants empirically. To that end we test the impact on financial statement and audit quality of audit-firm portfolio characteristics, that we selected based on a well-perceived theory by DeAngelo (1981). We indeed find that audit-firm portfolio characteristics better explain variations in financial statement and audit quality. In particular: 1) the short-term leverage of an audit firm's portfolio is negatively, and 2) the number of clients in an audit firm's portfolio is positively associated with financial statement and audit quality.Image; Characteristics; Companies; Decision making; Theory;

The influence of specific accounting differences on the choice between IFRS or US GAAP.

Due to the increased competition on capital markets and given the global importance of US markets, IFRS and US GAAP are competing to become the world standards set. Although comparable in many aspects, IFRS and US GAAP still differ in accounting for some transactions. This paper addresses the question whether specific accounting differences between IFRS and US GAAP determine the individual firm's accounting standard preference. The results show that firms prefer that accounting regime that offers them the largest flexibility (i.e. less disclosure or more measurement options) on relevant accounting items (e.g. R&D expenditures). Furthermore, the flexibility in measurement seems to result in accounting numbers that are significantly valued by investors.Accounting; Accounting differences; Accounting regime choice; Competition; Disclosure; Earnings quality; Firms; Flexibility; Market; Markets; Measurement; Options; Preference; R&D;

Attribute differences between US GAAP and IFRS earnings: An exploratory study.

With the successful completion of the IASC's standards, IFRS and US GAAP were placed as the two pre-eminent world financial reporting frameworks. For years, however, US GAAP was accepted widely as the international set of standards to ensure high quality financial statements. Especially in the US, but also elsewhere, the introduction of IFRS has lead to a discussion on the (relative) quality of both regimes. However, relatively little research has been devoted to the subject. In this study, we address that void and further compare the quality of the two standard regimes using a sample of German New Market firms. Financial statement quality is measured applying multiple earnings attributes traditionally used in accounting research. Consistently throughout our measures, we find that the quality of US GAAP prepared financial statements and IFRS information is overall very comparable. Only with regard to predictive ability of accounting information do we find US GAAP superiority.Accounting; Accounting regime; Earnings attributes; Earnings quality; Financial reporting; Firms; Framework; Information; International; Market; Quality; Reporting; Research; Selection bias; Studies;

Protective wrapping of off-the-shelf components

System designers using off-the-shelf components (OTSCs), whose internals they cannot change, often use add-on “wrappers” to adapt the OTSCs’ behaviour as required. In most cases, wrappers are used to change “functional” properties of the components they wrap. In this paper we discuss instead protective wrapping, the use of wrappers to improve the dependability – i.e., “non-functional” properties like availability, reliability, security, and/or safety – of a component and thus of a system. Wrappers can improve dependability by adding fault tolerance, e.g. graceful degradation, or error recovery mechanisms. We discuss the rational specification of such protective wrappers in view of system dependability requirements, and highlight some of the design trade-offs and uncertainties that affect system design with OTSCs and wrappers, and that differentiate it from other forms of fault-tolerant design

Specification of tools for message sequence charts

. The recent formalization of the semantics of Message Sequence Charts enables the derivation of tools for MSCs directly from this formal definition. We use the Asf+Sdf Meta-environment to make a straightforward implementation of tools for transformation, simulation and requirements testing. In this paper we present the complete specification of the tools. 1 Introduction Message Sequence Charts (MSCs) are a graphical method for the description of the interaction between system components [IT94]. Due to the recent formalization [MR94a, MR94b, IT95] of the semantics of Message Sequence Charts, we can consider MSC as a formal description technique. Currently, this formalization has already influenced the development of the language (in particular with respect to composition of MSCs, for which algebraic operators are considered) and it is expected to also influence the use of MSCs. Formalization will also have impact on the work of tool builders. The behavior of tools can be validated aga..

Mandatory Adoption of IFRS and Analysts’ Forecasts Information Properties

This study examines the properties of the information contained in analysts’ earnings forecasts for mandatory IFRS adopters in Europe for the period 2003-07. We find a significant increase in the precision of both public and private information after switching to IFRS, especially for forecasts pertaining to 2006 and later. However, we are unable to detect a change in the consensus among financial analysts after the mandatory adoption of IFRS. These results suggest that the higher percentage increase in the precision of common information is offset by a proportionate increase in the precision of private information such that consensus among analysts does not change. When exploring analyst-specific precision in more detail, we find that the analysts who are following firms in more than one European country experience the largest post-IFRS improvement in private information precision. These results hold after controlling for factors that are shown in prior research to be correlated with analysts’ information precision measures. Taken together, our results suggest that mandatory adoption of IFRS had a significant and positive effect on the information processing of financial analysts but this did not occur homogeneously across analysts.IFRS;mandatory IFRS adoption;analyst forecasts;information environment

Mandatory IFRS Reporting and Stock Price Informativeness

In this paper, we examine whether mandatory adoption of IFRS influences the flow of firm-specific information and contributes to stock price informativeness as measured by stock return synchronicity. Using a constant sample of 1,904 mandatory IFRS adopters in 14 EU countries for the period 2003-2007, we find a V-shaped pattern in synchronicity around IFRS adoption, which is consistent with IFRS disclosures revealing new firm-specific information in the adoption period (i.e., a reduction of synchronicity) and subsequently lowering the surprise of future disclosures (i.e., an increase in synchronicity). We also find mandatory IFRS adoption increases analysts’ ability to incorporate industry-level information into stock price. However, we are unable to detect a reduction in the private information advantage enjoyed by institutional owners post-IFRS adoption. Moreover, we find the synchronicity effects to be more pronounced for firms in countries with larger differences in local GAAP relative to IFRS. Overall, our evidence yields novel insights on the consequences of mandatory IFRS adoption by investigating its effect on stock price informativeness and the distinctive roles played by a firm’s information environment.IFRS;mandatory adoption;stock return synchronicity;information environment

Accounting standaarden als governance mechanisme

Binnen ondernemingen worden diverse maatregelen genomen ten einde het behoorlijk bestuur en de rapportering naar de belangenpartijen te verbeteren. Er wordt echter vaak vergeten dat de kwaliteit van de informatie die een investeerder krijgt, ook mede bepaald wordt door de gebruikte boekhoudstandaard. In deze studie worden de twee boekhoudstandaarden, die wedijveren om de status van wereldstandaard met elkaar vergeleken. De resultaten tonen aan dat financiële informatie een hogere informatiewaarde heeft wanneer ze opgesteld is volgens USGAAP dan IFRS. Dit kan mogelijk verklaard worden door de kenmerken van de standaarden op zich, de institutionele omgeving en de afwezigheid van één toezichtsorgaan voor IFRS, zoals de SEC voor USGAAP.