Could IFRS Replace US GAAP? A Comparison of Earnings Attributes and Informativeness in the US Market

We compare various earnings attributes of two accounting standards in one regulatory environment. We consider all firms that file Form 20-F reconciliations from IFRS to USGAAP with the SEC for 2004-2006. We find USGAAP and IFRS share many earnings attributes with two notable exceptions: USGAAP exhibits higher cash persistence and value relevance. Both IFRS and USGAAP accruals are incrementally informative over cash flows. While USGAAP net income has incremental informativeness over IFRS earnings and cash flows, the reverse is not true. USGAAP exhibits higher relative information content. Our results inform US regulators considering whether to permit, or require, IFRS