Case | HBS Case Collection | March 2011 (Revised May 2011)

Bridging the GAAPs

by Gwen Yu

Abstract

Inconsistencies in accounting treatment across countries are a major obstacle for global equity investment. Adoption of a single accounting standard (IFRS) has been received with much excitement, where apples to apples comparison across countries will become easier. However, adopting a global accounting standard may not necessarily mean that financial reporting in all countries will become standardized. Taking an example from HOLT, a private sector that offers standardized data for global portfolio investment, the case examines i) HOLT's adjustment process for differences in local accounting standards and ii) how IFRS adoption could change HOLT's global valuation framework. The case offers an interesting setting to examine how harmonizing accounting standards can affect global equity valuation.

Keywords: Financial Reporting; International Accounting; Private Equity; Investment; Globalized Markets and Industries; Information Management; Standards; Valuation;

Citation:

Yu, Gwen. "Bridging the GAAPs." Harvard Business School Case 111-114, March 2011. (Revised May 2011.) (Included in Harvard Business School's Premier Case Collection.)