Abstract
The study quantitatively investigated the factors influencing the support for a mandatory transition to the International Financial Reporting Standard (IFRS) by grouping survey data as critical driving factors (benefits) and critical inhibiting factors (obstacles). A strong correlation was found between the level of support, and the benefits, suggesting that the support for IFRS depends on awareness and perceptions about key benefits- ease of financial reporting, transparency, and costs reduction compared to GAAP. Two key obstacles found are the cost and the complexity of transition. Awareness and perceptions about IFRS differ significantly according to scope of business operation. National only companies (NOCs) are not enthusiastic about the advantages of IFRS compared to National and International Companies (NAICs). This study concludes that the advantages of IFRS surpass the disadvantages signifying a greater support. It shows there is a greater possibility for a U.S. mandatory transition to IFRS comes 2015. Further studies are recommended on the effectiveness of the IFRS Adoption Prediction Model (IAPM) that resulted from this study.
Highlights
The Security and Exchange Commission (SEC) deferred the scheduled adoption of the International Financial Reporting Standards (IFRS) from the year 2014 to 2015, and it is uncertain if a mandatory adoption will take place in 2015 regardless of IFRS global popularity and advantages
Preliminary findings from this study indicate that the perceived advantages of transition to IFRS overshadow the perceived disadvantages among trading companies in southern California
Based on the findings from this study nine conclusions were reached about the mandatory international financial reporting standards support among trading companies, trading companies in Southern California
Summary
The Security and Exchange Commission (SEC) deferred the scheduled adoption of the International Financial Reporting Standards (IFRS) from the year 2014 to 2015, and it is uncertain if a mandatory adoption will take place in 2015 regardless of IFRS global popularity and advantages. The problem is that contrary to expectation, the United States unlike many advanced nations in the world is yet to adopt International Financial Reporting Standards (IFRS). Many studies (Barniv & Fetykov, 1997; Choi & Meek, 2008; Daske, Hail, Leuz, & Verdi, 2008) have followed the IFRS issue, but few systematically and analytically examined the forces for and against mandatory adoption, in a way that provides facts about the IFRS adoption possibility or probability, which is essential for prompt decision-making and preparation by many companies. 3) Do the Perceived advantages of transition to IFRS in companies with international operations correlate positively with the support for IFRS adoption?
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