Could IFRS Replace US GAAP? A Comparison of Earnings Attributes and Informativeness in the US Market*

Elizabeth Gordon, Bjørn Jørgensen and Cheryl Linthicum
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Elizabeth Gordon: The University of Texas at San Antonio
Cheryl Linthicum: The University of Texas at San Antonio

No 28, Working Papers from College of Business, University of Texas at San Antonio

Abstract: We compare various earnings attributes of two accounting standards in one regulatory environment. We consider all firms that file Form 20-F reconciliations from IFRS to USGAAP with the SEC for 2004-2006. We find USGAAP and IFRS share many earnings attributes with two notable exceptions: USGAAP exhibits higher cash persistence and value relevance. Both IFRS and USGAAP accruals are incrementally informative over cash flows. While USGAAP net income has incremental informativeness over IFRS earnings and cash flows, the reverse is not true. USGAAP exhibits higher relative information content. Our results inform US regulators considering whether to permit, or require, IFRS.

Keywords: IFRS; US GAAP (search for similar items in EconPapers)
JEL-codes: M41 M48 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2011-06-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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