Up until 2007 non-U.S. firms that published IFRS-based financial statements and wished to raise capital on the U.S. stock markets (e.g., New York Stock Exchange) were required to file with the SEC a Form 20-F that included reconciliations of both net income and shareholder's equity as measured under U.S. GAAP and IFRS. The reconciliations provided a detailed explanation of the different ways in which net income and shareholders' equity were measured under the two systems.

Assume that you are an analyst attempting to compare the financial condition and performance of Nike, which publishes U.S. GAAP-based financial statements, and Adidas, which publishes IFRS-based financial statements. Would you be pleased with the SEC's decision to drop the reconciliation requirement? Explain.

  • CreatedAugust 19, 2014
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