Global Accounting Standards - A Success Story? An Empirical Investigation of the First FASB & IASB Convergence Project

Abstract

Business Combinations is the first completed joint convergence project of the FASB & IASB. The new business combinations standards converge US GAAP and IFRS in all but the calculation of non-controlling interests. Although the accounting community widely acknowledges the benefits of accounting harmonization, the drafts of new standards were met with overwhelming rejection.

It rarely happens that an exposure draft for a standard predominantly receives disaffirmation. The ill-fated nature of the first joint exposure draft gives rise to a number of questions. The standard setters may have misjudged the respective concerns of the traditionally clustered interest groups of users, preparers, auditors and academics. It may also be that the new task of combining constituent groups from different regional and jurisdictional back-grounds has proved too difficult.

We analyse comment letters on ED 3 and SFAS 141 and examine whether the approval or dissent of respondents is related to a regional (FASB vs. IASB) or professional (user vs. preparer) grouping scheme. We provide evidence that preferences are largely regional de-pendent on and not aligned with membership to professional constituency groups. The results give rise to concerns about the implications of global standards (setting) and its implications on compliance (possible adoptions of locally flavoured accounting standards).

Keywords: Accounting standards, Business combinations, convergence project

JEL Classification: M41, M44, M47, G38