Differences in accounting standards confuse investors and reduce the supply of capital Accounting Essay
IASC. International Accounting Standards for Capital Markets Judith A. Hora Rasoul H. Tondkar Ajay Adhikari Capital markets have become increasingly globalized due to advances in technology and communications and the growing trend of initiatives by national governments to deregulate their capital markets. Globalization of the IASB, the Conceptual Framework of the International Accounting Standards Board, specifies comparability as one of the qualitative characteristics of financial reporting information that enables that information to achieve the purpose of financial reporting. That purpose is to protect investors, lenders and other creditors, summary. This article examines how financial statement comparability affects the cost of capital and investor welfare. We show that the cost of capital decreases as comparability increases if and only if the quality of accounting standards is sufficiently high. This supports the relative importance of comparability as suggested in the Conceptual, Nevertheless, the following diagram from The End of Accounting and the Path Forward for Investors and Managers should give any financial reporting stakeholder pause. The value in the chart is a statistical measure of the explanatory power of reported earnings and book value for the market value of companies. The trend On the other hand, a government's source of income mainly comes from taxes. Third, there is the potential for longevity. The article explains that state and local governments rarely go bankrupt because they are given the ability to raise taxes and for that reason governments view accounting activities on a long-term rather than short-term basis. The following research analyzed the link between ESG sustainability scores and company valuations. We provide evidence that the overall ESG score for the Samp P is declining, meaning that these risk factors are taking their rightful place in the global economy. We find that the impact of environmental risks on corporate accounting policies consists of the specific principles, rules, and procedures implemented by a company's management team and used in preparing its financial statements. These include all methods. Problems arise when an investor needs to compare a company's performance, but the company follows different accounting standards due to its operations in different countries. A country located in China will follow different accounting practices than a company that uses accounting standards in the US,