Achieving the IASB's Output Legitimacy: A Prescriptive Model

The International Accounting Standards Board (IASB) struggles to provide comparable application of its International Financial Reporting Standards (IFRS) across the world. IFRS, of some form, are used by more than 130 countries; yet comparability in financial reporting and enforcement amongst IFRS reporting firms continues to be questioned. We used NVivo to conduct a content analyses of the discourse between the IASB, IOSCO, and national capital market regulators to examine the status of the IASB in achieving output legitimacy. Content analysis results revealed that output legitimacy is somewhat not existent. We then use normative theory to prescribe how IOSCO might be used as a portal for the IASB to achieve output legitimacy. We also suggest an organization structure for IOSCO that would include the SEC and its “comment letter” process as a way of reviewing and monitoring the financial reports of cross-border listed firms in compliance with IFRS as published by the IASB.