The Road Not Taken: Evaluating the Consequences of the United States’ Nonadoption of IFRS in 2012

John X. Jiang, David S. Koo () and Isabel Y. Wang ()
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John X. Jiang: Department of Accounting and Information Systems, Broad College of Business, Michigan State University, East Lansing, MI 48824, USA
David S. Koo: Costello College of Business, George Mason University, Fairfax, VA 22030, USA
Isabel Y. Wang: Department of Accounting and Information Systems, Broad College of Business, Michigan State University, East Lansing, MI 48824, USA

The International Journal of Accounting (TIJA), 2025, vol. 60, issue 02, 1-40

Abstract: SynopsisResearch ProblemThis study investigated the ramifications of the SEC’s choice not to adopt the International Financial Reporting Standards (IFRS) in 2012.MotivationThe nonadoption of IFRS by the United States in 2012 raised worries about the country’s influence on IFRS and the standards’ potential divergence from U.S. Generally Accepted Accounting Principles (GAAP). Our analysis offers insights into the United States’ reengagement with the IFRS, the development of sustainability reporting standards, and the evolution of accounting standards.Test HypothesesWe hypothesize that the United States has not lost influence over IFRS, and the momentum for these standards has not waned post-2012.Target PopulationWe examined countries and firms’ use of U.S. GAAP or IFRS standards, including foreign companies listed in U.S. exchanges.MethodologyWe conducted a robust review of scholarly literature, an analysis of arguments surrounding IFRS adoption in the United States, and a comparative study of IFRS and U.S. GAAP standards through 2022.AnalysesWe examined the historical attempts to integrate IFRS in the United States, market share trends of firms using IFRS, the enduring influence of the United States on IFRS standard setting, empirical evidence on eliminating the IFRS-to-U.S. GAAP reconciliation, and implications for global sustainability standards.FindingsOur findings challenge the fear that the divergence between IFRS and U.S. GAAP has widened after 2012. IFRS market share increased from 53.3% in 2011 to 76.7% in 2022, refuting assertions of declining momentum. The U.S. influence over IFRS remains intact. The elimination of IFRS-to-U.S. GAAP reconciliation requirements shows mixed empirical effects, warranting further research on market adaptations and firm-specific outcomes in post-reconciliation environments. Our analysis supports the value of pursuing global ESG reporting standards and highlights the complex investor reactions to potential U.S. IFRS adoption.

Keywords: International Financial Reporting Standards (IFRS); U.S. GAAP; standard-setting process; 20-F reconciliation; global financial regulation; sustainability; ESG (search for similar items in EconPapers)
JEL-codes: M41 M48 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1142/S1094406025300023

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