The U.S. Security and Exchange Commission last week published for public comment a schedule for the mandatory adoption of the international financial reporting standards developed by the International Accounting Standards Board (IASB). This follows the SEC's landmark decision Aug. 27 to pursue a shift from U.S. accounting standards (GAAP) to international standards.

A new study from Duke and Oxford universities, "Assessing the IASB," finds that a majority of chief financial officers from the United States, Germany, France and the United Kingdom favor these international standards, though 40 percent question whether truly global standards are achievable.

The International Standards Project, directed by Tim Buthe of Duke and Walter Mattli of Oxford, surveyed 749 corporate finance experts across a wide range of industries about corporate financial reporting and the standards developed by the private, London-based IASB. The survey was conducted over the course of several months, ending in February 2008. It aims to provide the first systematic assessment of IASB standards (quality, complexity, effectiveness) and its standard-setting process from the perspective of companies in the U.S. and Europe.

"There's a lot at stake in the seemingly technical task of setting accounting or financial reporting standards," says Buthe, an assistant professor of political science. "Good standards can improve the efficient allocation of scarce financial resources, but conversely, poor standards or standards that lend themselves to inconsistent implementation can seriously undermine public confidence in financial markets and thereby exacerbate financial crises and economic hardship."

Buthe says there are many good reasons for a single set of financial reporting standards. "Financial markets today are more global than national, and financial assets are highly mobile. Setting standards is essentially a form of regulation, and trying to regulate at the national level something that easily crosses borders is at best inefficient and often doesn't work at all. So you need international cooperation. But diplomats usually don't have the technical expertise to negotiate technical standards; it makes good sense, at least in the abstract, to delegate this task to private-sector experts such as the IASB."

The study's findings include:

-- Financial executives overwhelmingly expect financial reporting standards to be increasingly set at the international level, and a clear majority approves of this trend. However, almost 40 percent are skeptical whether full harmonization of standards and their implementation is feasible, given the differences in legal environments and business cultures across countries.

-- The survey shows that American executives, compared to their European counterparts, have a much more favorable assessment of key aspects of IASB reporting, such as due process, transparency, accessibility, inclusiveness and accountability.

-- Only 12 percent of U.S. respondents and 19 percent of European respondents view the trend toward "fair value accounting" favorably.

-- Almost 60 percent of U.S. and European financial executives think the complexity and cost of switching reporting standards may outweigh the benefits.

-- Ninety-three percent of U.S. companies say writing comment letters offering feedback is effective; only 51 percent of Europeans agree.

-- An overwhelming majority of respondents say early involvement in the standard-setting process is key.

Buthe says their research "is an important step toward understanding what opportunities the regulated have to influence the specific provisions of those IASB standards and whether firms' ability to do so differs across countries. Our findings show that U.S. firms generally do well in making their voices heard in this non-governmental international forum."