POWERING UP FOR IFRS The Effects of International Accounting Convergence on the Electric Utilities Industry
- Area of Honors:
- Bachelor of Science
- Document Type:
- Thesis Supervisors:
- Karl A Muller Iii, Thesis Supervisor
- Orie Edwin Barron, Honors Advisor
- Abstract The United States public utilities industry faces a multitude of changes occurring at a rapid pace. Aging infrastructure, high levels of retiring employees, deregulation, foreign competition, and convergence with international accounting standards loom over the industry as major obstacles. This paper concentrates on the impact convergence with international accounting standards may have on the public utilities industry if implemented in 2015. To begin researching how the industry plans to handle the impact of convergence, I interviewed an IFRS expert from Ernst & Young, and conducted a survey completed by twelve controllers and CFOs working for large SEC filing utility companies. The survey provided valuable responses indicating aspects of convergence that pose a particular concern to the industry. The second method of research in this paper involves an empirical study analyzing how the financial performance of U.S. public utility companies could potentially be impacted as a result of convergence. To accomplish this, five European companies that have already converged and who filed form 20-F were examined to note how convergence may affect ROE, EPS, Equity, and certain financial statement line-items. From this study, one could infer how the selected performance indicators may react when U.S. utility companies converge. The results indicated that on average, convergence positively impacted most of the selected performance indicators in the five company sample.