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Unformatted text preview: Proponents of I FR S often claim that the new standards w ill deliv er
significant capital-m arket benefits. For instance, the international rules are said to im prov e the
transparency and com parability of corporate reporting around the w orld, w hich, in turn, could low er
firm s’ capital costs and increase m arket liquidity . These alleged benefits are alm ost certainly
ov erstated, at least, as far as U .S. firm s are concerned. The U .S. already has a sy stem of high-quality
accounting standards and it is unlikely that financial reporting practices by U .S. firm s w ill im prov e
significantly as a result of I FR S adoption.
Sim ilarly , the benefits of I FR S in creating cross-country com parability are exaggerated. With or
w ithout I FR S, there w ill be div ergent reporting practices around the w orld because accounting
standards are only one of m any inputs that determ ine com panies’ reporting practices. O ther factors
include countries’ legal institutions, their capital m arkets, firm s’ business and gov ernance practices,
and m anagers’ perso...
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This document was uploaded on 03/06/2014 for the course MGMT 4369 at Texas Pan American.
- Spring '14