ABSTRACT
The chapter explains that the EU’s decision to endorse International Financial Reporting Standards (IFRS Standards) for use by listed companies across member states, taking effect from 2005, has significantly raised the profile of IFRS Standards internationally. The EU retains control through its legislative process of endorsement, involving both technical and political scrutiny of IFRS Standards. It then applies its power over listed companies through a Regulation, which overrides national legislation in member states. Further influence is exercised through Directives, which must be incorporated in national law. Directives usually include some options that allow national legislators flexibility in meeting local needs and preferences. The European Securities and Markets Authority (ESMA) works with national securities markets regulators to identify, and take action against, failures to apply IFRS Standards in listed companies. The chapter discusses research studies ranging across comparative classification of the implementation of IFRS Standards, the value relevance of information on the transition to IFRS Standards, and the consultation process of EFRAG. In all cases, these studies indicate the considerable volume of evidence and analysis required in making such comparative studies.
