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Is Compliance with International Accounting Standards
Beneficial?. Edition No. 1
VDM Publishing House, Aug 2008, Pages: 120
This study provides evidence regarding the benefits
of complying with International Accounting Standards
(IAS), now known as International Financial Reporting
Standards (IFRS). Companies expend considerable
resources on financial reporting. These resources
may or may not be recouped through benefits such as
lower costs of capital. Using three proxies for
information asymmetry, which has been shown to impact
a firm’s cost of capital, this study shows that the
extent of compliance with IAS apparently does not
impact these proxies. A related investigation of the
factors associated with IAS compliance for this
sample of companies suggests that compliance seems to
be related primarily to the country of domicile.
Firms from Switzerland comply with IAS to a greater
degree than firms from France and Sweden. When an
auditor confirms the use of IAS, it is also a strong
indicator of relatively higher levels of IAS
compliance. Overall, however, the results of this
study place in question the motives for a firm to
incur additional financial reporting costs in an
attempt to comply with IAS.
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