We develop a theoretical framework that explains firms' reactions to new accounting standards, especially, those released by the FASB under its extended adoption policy. Our theory highlights the differences between recognized and disclosed accounting information, and provides a link between...

Studies comparing IFRS with U.S. GAAP generally focus on differences in the attributes and consequences of the recognized financial items. We, in contrast, focus on voluntary disclosure resulting from arguably the most significant difference between IFRS and GAAP: the capitalization of...