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Major expected costs and benefits for globalized businesses

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With the globalization of corporate business and cross border security listings, the need for a common set of accounting standards to be applied worldwide emerged to the surface. Both the IASB and the FASB have taken steps towards this goal.

As a result, the SEC recently has abolished the reconciliation to US GAAP required from foreign firms listing on US exchanges, allowing them to file using the IFRS.

Required:
A. Analyze the costs and benefits of cross border security listings.
B. Discuss major expected costs and benefits of US firms adopting IFRS.

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Solution Summary

The major expected costs and benefits for globalized business are determined.

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Obviously, the most important benefit of a cross border security listings is diversification of capital. Given how global businesses today are, it is a matter of survival rather than competitive or comparative advantage that sources of funds also be global. This diversification will minimize the risk of capital flight which is a result of market volatility - if the stocks of the company are ...

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