A key objective of the introduction of IFRS was to increase international comparability of financial statements and to further aid the decision making of financial statement users. The rationale being that financial statements can be deemed useful if they lead to improved decision making.
We have recently examined the impact of IFRS on the usefulness of financial statement information, measured as the material effect it has on stock prices and returns. Our analysis of over 20,000 financial statements between 1992 and 2011 in the Netherlands, UK, Germany, and France indicates that IFRS has in fact increased the usefulness of financial statement information – good news for companies that have gone through the time-consuming and costly process of converting from local GAAP to IFRS.
Given ongoing global initiatives to refine and improve accounting standards, we expect this trend to continue.