Many countries are adopting International Financial Reporting Standards (IFRS) 17, which demands more complex accounting processes from insurance companies. Are the benefits of IFRS 17 worth the costs of implementing such a complex system?

Martin Grace and Sudipta Basu examine the Sarbanes-Oxley Act of 2002, the most recent overhaul to accounting standards within the United States, and stock market reactions to announcements that changed the likelihood that IFRS 17 would be enacted.

Their findings indicate that in the short-term, there are extensive costs to overhauling accounting standards. However, the results are inconclusive about whether it is beneficial in the long-term.