Although International Financial Reporting Standards (IFRSs) are being adopted in more and more jurisdictions there still seems to persist a feeling that there are different “flavours” of IFRSs around the world and the promised capital-market effects seem not to have materialised in every case and to the extent expected. Christian Leuz looks into the issue and suggests a new approach to convergence.

He suggests a new and different approach to global accounting convergence. The basic idea is to focus only on those companies for which international comparability is likely important and going to yield positive capital market effects. He proposes to create a ‘Global Player Segment’ (GPS) in which firms would be required to use the same reporting rules (i.e., IFRS), face the same enforcement mechanisms and have the same incentives for transparency in their reporting.

We thank Professor Leuz for allowing us to post a summary of his proposal on IAS Plus.

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