Implementation of IFRS Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Adoption of IFRS by the U.S

(Part I): Conceptual Underpinnings and Economic Analysis

This paper describes the economic and policy factors associated to the adaptation of IFRS (International Financial Reporting Standards) by the U.S. In this section, cost and benefit factors have also been discussed from IFRS adaptation in the United States. Macroeconomic factors that affect the IFRS implementation as well as switching cost have also been discussed. Various factors need to be focused during the implementation of IFRS in the U.S and in other countries. Corporate reporting and corporate disclosure are also one of the factors that have been discussed. Investors and other stakeholders benefit have also been analyzed with reference to IFRS implementation. The terms “reporting” and “disclosure” are used in a very broad sense and they refer to firm’s practices rather than the standards. The role of accounting standards has also discussed because without the successful implementation of the financial reporting; it can’t be organized and maintained. There are various economic consequences of corporate reporting discussed in the paper but it is not possible to discuss all of them. One of the important corporate reporting factors that have been discussed in the paper is the consequence of reporting quality on market liquidity. Better reporting and better disclosure lead to healthy corporate decisions and also make it much easier for investors to estimate future cash flows and it will also make a positive impact on the firm’s cost of capital. Another very important aspect of corporate reporting is comparability across firms that make it easier and less costly for investors and other stakeholders.

Accounting standards are effective to attract ownership and financing in a country and results in more financial contracting for example leasing, performance based compensation etc. In the paper most of the arguments are in favor on IFRS’ implementation for investors and capital markets. Successful implementation of IFRS results in improved financial reporting to foreign investors. If there is proper implementation of IFRS, then it will improve corporate reporting and disclosure as well as lead to an increase in market liquidity and decreases the firm’s cost of capital. The paper demonstrates that it is very important to consider the contracting role of accounting when evaluating IFRS. IFRS has different consequences for different countries as per their economies; it is not mandatory that it will provide favorable results to anyone and applies to the U.S. as well. Switching from GAAP to IFRS in the United States has also been discussed in the paper. Shifting from GAAP to IFRS in the United States changes the quality of U.S corporate reporting standards. The U.S economy ...........................

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