Improving the global comparability of IFRS-based financial reporting through global enforcement: a proposed organizational dynamic

Abstract

AbstractThe International Accounting Standards Board (IASB) seeks to provide global financial reporting comparability of its International Financial Reporting Standards (IFRS). The objective of this study is to propose an organizational dynamic that could improve global comparability of financial reporting under IFRS through rigorous and homogeneous global enforcement. We use the qualitative framework of Gioia et al. (Organ Res Methods 16:15–31, 2012) to identify the relevant literature, methodologies, and organizational dynamics to understand the issues and changes needed to possibly achieve full-IFRS financial reporting for cross-border listed firms. We draw on previous studies that provided evidence of limitations and issues about comparability of financial reporting based on (not homogeneous) adoption, application, and enforcement of IFRS worldwide. A content analysis of IASB’s deliberations in developing its interactions with (International Organization of Securities Commissions (IOSCO)) and national regulatory bodies is used to provide evidence about the initiatives IASB has undertaken to support the homogeneous global enforcement of its standards. Then, we prescribe an organizational dynamics change for IOSCO, to enhance its engagement in promoting rigorous and homogeneous enforcement of IFRS globally. Lastly, we propose that IOSCO review, at least once every three years, cross-border listed firms’ financial reports using a comment letter approach. The results of such a review would be publicly available so that investors and creditors might be able to ascertain whether the financial reports published by cross-border listed firms are comparable with their cross-border listed competitors stating IFRS compliance.