Economics & Finance / Finance & Investment / Financial Regulation & Reform

IFRS vs HGB: Did Switching to IAS Actually Improve Accounting? (Germany Case Study)

Mingyi Hung, K. R. Subramanyam

When Germany forced its companies to switch from the old, conservative HGB accounting to the shareholder-friendly IAS (IFRS), everyone expected better numbers. But a landmark 2007 study by Mingyi Hung and K. R. Subramanyam in the Review of Accounting Studies dropped a bombshell: the new rules didn't make financial reports more useful for investors. In fact, they made profits more volatile, added noise, and shifted focus from the income statement to the balance sheet. This video breaks down the real-world effects of that transition, using actual data from 80 German firms. You'll learn why a 'better' accounting system doesn't always mean better information—and what that means for investors today.