Do International Financial Reporting Standards Live Up to Their Promise?

At a time when many barriers to global trade have fallen, countries all over the world are taking steps to harmonize their accounting standards and develop a truly global language of business. Under the lead of the International Accounting Standards Board (IASB), more than 100 countries have either implemented International Financial Reporting Standards (IFRS) or plan to do so. Yet while proponents of accounting harmonization say that IFRS will ultimately benefit firms and investors, Wharton accounting professor Luzi Hail says that there are reasons to be skeptical about these high hopes. He and three co-authors present their views in a new paper titled, “Mandatory IFRS Reporting Around the World: Early Evidence on the Economic Consequences.”