Ericsson: The Challenges Of Listing On Global Capital Market And The Move Of Adopt International – Case Study Example
Case Study Affiliation: Ericsson is d back to a humble beginning, but throughout the years it has attained a significant position in the cellular handsets industry. Its bid for financial success has played a crucial role throughout the years. On the same note, the importance of reporting the company’s financial results has never been downplayed. The company moved from observing and complying with Swedish GAAP to the use of IFRS in reporting its financial results (Daniels, Lee & Sullivan, 2008).
The company’s accounting standards and practices are influenced by three major sources. The first one is its bid to use foreign stock exchanges to raise capital. In order to do so, changes in accounting standards and practices are necessary to place the company within the same financial standards as those applicable to companies that constitute the stock exchanges it targets. The second source is the local, regional and international trends in accounting and financial reporting. Companies are striving to become more transparent in reporting their financial results. The influence of this trend on Sweden, European Union (EU) and the world at large cannot be ignored. Finally, competition and need for global presence is often influencing the company towards embracing internationally accepted accounting standards.
Given the position of the CFO, I would recommend that Ericsson adopt full IFRS. The IFRS as adopted by the EU is to some extent limiting, and this would not grant Ericsson a full global exposure. The full IFRS will not only guarantee Ericsson regional stock exchanges, but international stock exchanges as well. Adopting the full IFRS would not mean that Ericson will have to only use U.S GAAP in preparing financial statements. The company will rather employ IFRS as used by global firms. With this, the company can list on European exchanges, as well as in exchanges outside the EU region.
Daniels, J., Lee, H. & Sullivan, P. (2008). International Business: Environments and Operations.
New York: Prentice Hall.