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36-435: International Accounting Standards IAS 32 and 39 define a financial instrument as "any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity". Financial instruments may be categorized by " asset class " depending on whether they are foreign exchange-based (reflecting foreign exchange instruments and transactions), equity-based (reflecting ownership of

72-547: A corporate sponsorship by Rheem (Australia) afforded the opportunity to attend university. He has pursued an academic career ever since. Ball studied Accounting at the University of NSW (Australia), graduating with First Class Honors and the University Medal . He obtained an MBA degree in 1968 and Ph.D. in economics in 1972 from the University of Chicago , where his doctoral supervisor was Eugene F. Fama . He

108-814: A financial instrument is as follows: International Financial Reporting Standards International Financial Reporting Standards , commonly called IFRS , are accounting standards issued by the IFRS Foundation and the International Accounting Standards Board (IASB). They constitute a standardised way of describing the company's financial performance and position so that company financial statements are understandable and comparable across international boundaries. They are particularly relevant for companies with shares or securities publicly listed. IFRS have replaced many different national accounting standards around

144-880: A particular innovation in the practice of finance.” Ball was awarded honorary degrees by the Helsinki School of Economics, the Katholieke Universiteit Leuven, the University of Queensland, the University of London, and the University of New South Wales. He was elected to the U.S. Accounting Hall of Fame in 2009 and to the Australian Accounting Hall of Fame in 2018. In 2015, the Institute of Chartered Accountants in England and Wales made him its eighth Honorary Member. He

180-540: A tool for the IASB to develop standards. It does not override the requirements of individual IFRSs. Some companies may use the Framework as a reference for selecting their accounting policies in the absence of specific IFRS requirements. The Conceptual Framework states that the primary purpose of financial information is to be useful to existing and potential investors, lenders and other creditors when making decisions about

216-432: Is a CPA and Fellow of CPA Australia . Ray Ball pioneered the development of financial economics in the area of accounting. He (with Philip Brown) was first to demonstrate the link between firms’ accounting earnings information and their market values. He also was first to identify the existence of systematic anomalies in efficient market theory . He publishes in both the accounting and financial economics literatures, and

252-563: Is a researcher and educator in accounting and financial economics. He is the Sidney Davidson Distinguished Service Professor of Accounting in the University of Chicago ’s Booth School of Business . He has published foundational research on the economics of financial reporting and financial markets. Ball was born in 1944 on the outskirts of Sydney, Australia. He became the first member of his family with an opportunity to graduate high school, and

288-489: Is ranked in the top 5% of all economists by RePEc (Research Papers in Economics). His 1968 Journal of Accounting Research paper (co-authored with Philip Brown) revolutionized our understanding of the economic properties of accounting earnings and how earnings information is related to firms’ market values. The paper founded the modern economics-based financial accounting literature . Ball and Brown (1968) also reported

324-661: The European Union (EU) agreed that, from 1 January 2005, International Financial Reporting Standards would apply for the consolidated accounts of the EU listed companies, bringing about the introduction of IFRS to many large entities. Other countries have since followed the lead of the EU. In 2021, on the occasion of COP26 of the United Nations Framework Convention on Climate Change in Glasgow,

360-509: The International Accounting Standards Board (IASB) replaced the IASC with a remit to bring about convergence between national accounting standards through the development of global accounting standards. During its first meeting the new Board adopted existing IAS and Standing Interpretations Committee standards (SICs). The IASB has continued to develop standards calling the new standards "International Financial Reporting Standards" (IFRS). In 2002,

396-579: The American Accounting Association's first Seminal Contributions to Accounting Literature Award, which stated: "No other paper has been cited as often or has played so important a role in the development of accounting research during the past thirty years.” In 2019 Ball and Brown (1968) received practitioner recognition in the 2019 Wharton-Jacobs Levy Prize for Quantitative Financial Innovation, “given biennially to recognize excellence in quantitative research that has contributed to

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432-564: The IFRS Foundation announced the formation of the new International Sustainability Standards Board ISSB. IFRS Standards are required or permitted in 132 jurisdictions across the world, including major countries and territories such as Australia , Brazil , Canada , Chile , the European Union , GCC countries , Hong Kong , India , Israel , Malaysia , Pakistan , Philippines , Russia , Singapore , South Africa , South Korea , Taiwan , and Turkey . To assess progress towards

468-508: The SEC announced that it expected separate US GAAP to continue for the foreseeable future but sought to encourage further work to align the two standards. IFRS is sometimes described as principles-based, as opposed to a rules-based approach in US GAAP; so in US GAAP there is more instruction in the application of standards to specific examples and industries. The Conceptual Framework serves as

504-698: The Securities and Exchange Commission (SEC) issued a report setting out observations on a potential adoption of IFRS in the United States. This included the following criticisms: IASB staff have responded to these observations and concluded that there were no insurmountable obstacles for the adoption of IFRS by the United States. In 2013 IASB member Philippe Danjou listed ten common criticisms of IFRS. He sought to counter these, describing them as misconceptions Charles Lee, professor of accounting at Stanford Graduate School of Business, has also criticised

540-554: The U.S. as Wesray Professor of Business Administration in the Simon School at the University of Rochester. At Rochester, from 1986-2000 he edited the Journal of Accounting and Economics , one of the top journals in the field. In 2000 he moved back to Chicago, where until 2015 he edited the Journal of Accounting Research , also one of the top journals in the field. In 1986 Ball and Brown (1968) received academic recognition in

576-762: The US, conducted foundational research on the Australian capital market, and developed the first US-style PhD program in Accounting and Finance in Australia. In 1976 he founded the Australian Journal of Management , currently in its 46th year of publication, in recognition of which the Journal annually awards The Ray Ball Prize for the best paper published during the previous year. In 1986 Ball returned to

612-467: The University of Queensland. This made him the youngest person to hold a full professorship in any faculty of that University, and reportedly was the second youngest ever full-professor appointment in any area in any Australian university. During his four years at Queensland, he transformed the Commerce (business) faculty, creating a research culture, emphasising junior faculty development, and introducing

648-528: The elements of financial statements to be: An item is recognized in the financial statements when: In some cases specific standards add additional conditions before recognition is possible or prohibit recognition altogether. An example is the recognition of internally generated brands, mastheads , publishing titles, customer lists and items similar in substance, for which recognition is prohibited by IAS 38. In addition research and development expenses can only be recognised as an intangible asset if they cross

684-486: The financing of the entity and exercising rights to vote on, or otherwise influence, management's actions that affect the use of the entity's economic resources. Users base their expectations of returns on their assessment of: The Conceptual Framework for Financial Reporting defines the fundamental qualitative characteristics of financial information to be: The Framework also describes the following enhancing qualitative characteristics: The Conceptual Framework defines

720-475: The first accounting research workshop in the country. In 1976 Ball moved to the University of New South Wales in Sydney, as a Foundation Professor in the newly-established Australian Graduate School of Management (AGSM), the first Australian school to offer a US-style full-time MBA program. At AGSM, working with his colleague Philip Brown, Ball oversaw construction of the first financial research databases outside

756-489: The first anomalous evidence for the Efficient Markets Hypothesis , an important financial economics theory that had been introduced by Eugene F. Fama in 1965. The anomaly was that the stock market reaction to earnings announcements seemed to continue well beyond the announcement date, contrary to the theory. By the early 1970s Ball realized this phenomenon was systematic. That realization eventually

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792-621: The following concepts of capital maintenance: Most entities adopt a financial concept of capital maintenance. However, the Conceptual Framework does not prescribe any model of capital maintenance. IFRS financial statements consist of: Comparative information is required for the prior reporting period. The following are the general features in IFRS: Cash flow statements in IFRS are presented as follows: In 2012, staff of

828-462: The goal of a single set of global accounting standards, the IFRS Foundation has developed and posted profiles about the use of IFRS Standards in individual jurisdictions. These are based on information from various sources. The starting point was the responses provided by standard-setting and other relevant bodies to a survey that the IFRS Foundation conducted. As of August 2019, profiles are completed for 166 jurisdictions, with 166 jurisdictions requiring

864-408: The issuing entity) or debt-based (reflecting a loan the investor has made to the issuing entity). If the instrument is debt it can be further categorized into short-term (less than one year) or long-term. Financial instruments can be either cash instruments or derivative instruments: Some instruments defy categorization into the above matrix, for example repurchase agreements . The gain or loss on

900-533: The overall cost of the international standard; he argues that the enforcement of the standards could be lax, and the regional differences in accounting could become obscured behind a label. He also expressed concerns about the fair value emphasis of IFRS and the influence of accountants from non- common-law regions, where losses have been recognised in a less timely manner. US Generally Accepted Accounting Principles , commonly called US GAAP, remains separate from IFRS. The Securities Exchange Committee (SEC) requires

936-464: The quality of information. Companies are also expected to benefit, as investors will be more willing to provide financing. Companies that have high levels of international activities are among the group that would benefit from a switch to IFRS Standards. Companies that are involved in foreign activities and investing benefit from the switch due to the increased comparability of a set accounting standard. However, Ray J. Ball has expressed some scepticism of

972-627: The threshold of being classified as 'development cost'. Whilst the standard on provisions, IAS 37, prohibits the recognition of a provision for contingent liabilities, this prohibition is not applicable to the accounting for contingent liabilities in a business combination. In that case the acquirer shall recognise a contingent liability even if it is not probable that an outflow of resources embodying economic benefits will be required. Concepts of capital maintenance are important as only income earned in excess of amounts needed to maintain capital may be regarded as profit. The Conceptual Framework describes

1008-588: The time IFRS is introduced, it is unclear whether IFRS mandate adoption is the sole reason for observed market effects. Firms' reporting incentives, law enforcement, and increased comparability of financial reports can also explain the effects. The adoption of IFRS in the European Union is a special case because it is an element of wider reforms aiming to consolidate the economies of member countries. One study reports positive market effects for companies adopting IFRS, but these positive effects occurred even before

1044-475: The transition took place. Another study looked at the development of the stock market in Poland; it found positive effects associated with Poland joining the EU but no specific effect attributable to its adoption of IFRS. Interestingly, member states maintain a large degree of independence in setting national accounting standards for companies that prefer to stay local. Ray J. Ball Raymond J. (Ray) Ball

1080-452: The use of IFRS Standards. Due to the difficulty of maintaining up-to-date information in individual jurisdictions, three sources of information on current worldwide IFRS adoption are recommended: Ray J. Ball described the expectation by the European Union and others that IFRS adoption worldwide would be beneficial to investors and other users of financial statements, by reducing the costs of comparing investment opportunities and increasing

1116-614: The use of US GAAP by domestic companies with listed securities and does not permit them to use IFRS; US GAAP is also used by some companies in Japan and the rest of the world. In 2002 IASB and the Financial Accounting Standards Board (FASB), the body supporting US GAAP, announced a programme known as the Norwalk Agreement that aimed at eliminating differences between IFRS and US GAAP. In 2012

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1152-446: The use of fair values in financial reporting. In 2019, H David Sherman and S David Young criticised the current state of financial reporting under IFRS and US GAAP:- Many researchers have studied the effects of IFRS adoption, but results are unclear. For example, one study used data from 26 countries to study the economic consequences of mandatory IFRS adoption. It showed that, on average, even though market liquidity increases around

1188-529: The world but have not replaced the separate accounting standards in the United States where U.S. GAAP is applied. The International Accounting Standards Committee (IASC) was established in June 1973 by accountancy bodies representing ten countries. It devised and published International Accounting Standards (IAS), interpretations and a conceptual framework. These were looked to by many national accounting standard-setters in developing national standards. In 2001,

1224-846: Was a Fulbright Scholar. Ball serves on the Advisory Group for the Financial Reporting Faculty of the Institute of Chartered Accountants in England and Wales (ICAEW). He has served on the Financial Accounting Standards Advisory Council (FASAC) of the Financial Accounting Standards Board (FASB), on the Shadow Financial Regulation Committee, and as a Trustee of Harbor Funds. He served as a professor at

1260-436: Was influential in opening the accounting literature to researching firms that are not publicly traded. Ball’s first full-time academic position was as Assistant Professor of Accounting and Finance at the University of Chicago, from 1969 to 1972. Visa restrictions required him to relinquish the position and return to Australia. In August 1971, at age 26, he was appointed to the position of Professor of Accounting and Finance at

1296-897: Was published in a 1978 publication that used Thomas Kuhn’s concept of an anomaly to describe the phenomenon. The paper was the first documentation that anomalies in efficient market theory are systematic. The anomaly became known in the accounting literature as post earnings announcement drift and in the financial economics literature as the profitability factor in asset pricing models. Other foundational research includes "The Effect of International Institutional Factors on Properties of Accounting Earnings," co-authored with S.P. Kothari and Ashok Robin and published in Journal of Accounting and Economics in 2000, that has influenced much international accounting research. “Earnings Quality in U.K. Private Firms,” co-authored with Lakshmanan Shivakumar and published in Journal of Accounting and Economics in 2005,

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