A Theoretical and Empirical Analysis
After years of development and debate, the International Accounting Standards Board (IASB) has recently published an International Finan-cial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs, IASB 2009). This standard provides an adoption of the “full” In-ternational Financial Reporting Standards (IFRS), which were designed with publicly traded entities in mind, to the environment of private firms. If the EU or its member states introduced the IFRS for SMEs, it would impose a major change of financial accounting regulation on millions of European firms.
This research report evaluates on a priori basis whether such a regulatory move would benefit European SME firms. The authors analyze the character and role of financial accounting in the SME setting theoreti-cally and empirically in order to give an ex ante opinion on whether an adoption of a homogenous financial accounting regime across European SMEs can be expected to be beneficiary.
Taken together, the results suggest that the essential preconditions for successful SME financial accounting harmonization across Europe are - at least currently - not met.
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