Empirical test on the removal of reconciliation requirement from IFRS to US-GAAP

On March 4, 2008, Release No. 33-8879 adopted by the Securities and Exchange Commission (SEC) went into effect and eliminated the need for US-listed foreign companies who prepare financial statements in accordance with IASB-IFRS (International Financial Reporting Standards as issued by the International Accounting Standards Board) to reconcile their financial statements to US-GAAP (US Generally Accepted Accounting Principles). Former studies based on data before 2005 revealed significant differences between IFRS reported measures and US-GAAP reported measures and found Release No. 33-8879 to have been premature. This study updates the literature on differences between IFRS and US-GAAP with recent data and studies convergence between IFRS and US-GAAP by evaluating IFRS vs. US-GAAP comparability in reported net income and net assets from 2004 to 2006. The evidence of convergence is identified.