2002 Volume 10 Issue 1 Pages 63-76
The objective of this paper is to compare accounting figures under International Accounting Standards (IAS) with those figures under U.S. GAAP. Foreign companies might follow IAS to issue securities in NYSE. It is important to analyze the accounting variables under both accounting rules on a comparable basis. Major results of this paper are as follows; Steady-state firms make the same incomes under either IAS or GAAP in the long-run. But the assets of steady-state firms under IAS are increased by the capitalized portion of development costs than the assets under GAAP. As a result, for steady-state firms, return on assets under IAS is smaller than return on assets under GAAP. On the other hand, debt to equity ratio under IAS is smaller than the ratio under GAAP. Variance of income of steady-state firms under IAS is smaller than variance of income under GAAP. Expanding firms make larger incomes under IAS than under GAAP. P/E ratio of expanding firms under IAS is smaller than the ratio under GAAP.
