What drives the comparability effect of mandatory IFRS adoption?

We investigate the effects of mandatory IFRS adoption on the comparability of financial accounting information. Using two comparability proxies based on De Franco et al. [2011] and a comparability proxy based on the degree of information transfer, our results suggest that the overall comparability effect of mandatory IFRS adoption is marginal. We hypothesize that firm-level heterogeneity in IFRS compliance explains the limited comparability effect. To test this conjecture, we first hand-collect data on IFRS compliance for a sample of German and Italian firms and find that firm-, region-, and country-level incentives systematically shape IFRS compliance. We then use the identified compliance determinants to explain the variance in the comparability effect of mandatory IFRS adoption and find it to vary systematically with firm-level compliance determinants, suggesting that only firms with high compliance incentives experience substantial increases in comparability. Moreover, we document that firms from countries with tighter reporting enforcement experience larger IFRS comparability effects, and that public firms adopting IFRS become less comparable to local GAAP private firms from the same country

Equivalence of greenhouse-gas emissions for peak temperature limits

Climate policies address emissions of many greenhouse gases including carbon dioxide, methane, nitrous oxide and various halogen-containing compounds. These are aggregated and traded on a CO2-equivalent basis using the 100-year global warming potential (GWP100); however, the GWP100 has received scientific and economic criticism as a tool for policy. In particular, given international agreement to limit global average warming to 2 °C, the GWP100 does not measure temperature and does not clearly signal the need to limit cumulative CO2 emissions. Here, we show that future peak temperature is constrained by cumulative emissions of several long-lived gases (including CO2 and N2O) and emission rates of a separate basket of shorter-lived species (including CH4). For each basket we develop an emissions-equivalence metric allowing peak temperature to be estimated directly for any emissions scenario. Today’s emissions of shorter-lived species have a lesser impact on ultimate peak temperature than those nearer the time of peaking. The 2 °C limit could therefore be met by setting a limit to cumulative long-lived CO2-equivalent emissions while setting a maximum future rate for shorter-lived emissions