International Financial Reporting Standards and Mergers

This assignment delves into the significant role of International Financial Reporting Standards (IFRS) in mergers and acquisitions. It examines how IFRS influences financial reporting practices, enabling more transparent and comparable financial statements for entities operating in diverse economies. The analysis extends to the impact of IFRS on overall performance and highlights the challenges posed by cultural differences during mergers and acquisitions across various countries like the UK, USA, Germany, and Japan.

INTERNATIONAL
FINANCIAL
MANAGEMENT

INTRODUCTION
Finance is one of the component help an entity in transforming their existing conditions
of their business which gets totally changed when the status of an entity shifted from domestic to
the international level. This report is all about analysing the importance of mergers and
acquisitions in four countries such as UK, USA, Germany and Japan and also emphasises on
international harmonisation on the same field.
Critically appraise the success of mergers and acquisitions in the four countries
According to the Beckman, (2016) the merger and acquisition is the consolidation of the
two or more companies. Merger means the combination of two companies in form of one and
acquisition means strong company acquire weak company to cover their current business losses.
As per present scenario, UK is regarded as the best places for tourism purpose which attracts lot
of people from all across the world. They provides license easily to operate their business in this
country. They have less custom duty as compare to another. Import and export can be easily
manageable in this country. UK has less political issues so that an entity will operate their firm
easily. In UK organizations obtain easily qualitative and well equipped staff to manage their
business. Famous tourists spots attracts lots of visitors that help an entity in inducing their
current level of sales. There are wide number of customers attracted by an entity which
generates large amount of profits.
As per the views of Mager and Meyer-Fackler, (2017) USA is the second largest
purchasing power parity in the whole world that reflects its overall economic conditions. Most
common used currency in international market is U.S. dollar which is world's most reserving
currency. US is the the main engine of manufacturing that represents the major output of
manufacturing in the world. It has most influential financial market such as New York stock
exchange that is one of the largest stock exchange. organization have lot of chance to grow and
satisfy the needs of consumers. They will get the huge power and control over the market while
dealing in the current business. Due to economic factors, it is feasible to raise buying power and
run entity with large production. All these factors help to the organization to achieve their goals
and make long term profit.
According to the views of Beckman, (2016) Japan have one of the largest technologies in
the world. Japanese electronic product carries world’s largest share of market. It is one of the
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leading nation in the field of machinery, technology and scientific research. Japan is also most
innovative nation, it has huge amount of technologies to reduce the work and increase the
efficiency and effectiveness of the work. There are less political issues even their government
provides many helps to run the business. They coordinate with the market economy to achieve
more success in a truthful manner. They have effective combination of monetary, credit, trade,
custom, investment etc., so organization faces less challenges issues or problem to run their
business. They have more chances to expand and achieves more success in their field. In Japan,
organization receives more powerful techniques and machinery to operate their entire work with
more efficiently and effectively.
As per the Janani, (2016) Germany is famous for its environment, car technologies and
music market. They provide land in affordable price to the organization to operate their business.
Germany provides fair transaction price and correct business valuation from a legal, tax and
strategic stand point. Market condition and economic condition of the Germany are very good
for survive the entity profitably. From all these point, organization’s cost of production will get
reduced and they achieve more amount of profit easily. The financial risk for the organizations
are low so that they can take chances for enhancing their work in less fear. German government
plays a crucial role for the organization as they gives them valuable services as much as possible
such as license, custom, import export. organization will achieve their goals and satisfy the wants
and needs of the consumers. Market is going to be extend due to the mergers so that both buyers
and seller will get benefit from this approach. Buyers will get products in less cost and seller will
generate large market share.
Beckman, (2016) has asserted that all these countries are good for merger and acquisition
as among all above countries, USA is the best, because of their large number of populations,
their economic growth, currency value and the government support. The cost of production is
less as compare to other countries of produce goods and services here. Their is no issues and
problems regarding economic factor, social factor and political factors to run organization.
Analyse the possibilities of international harmonisation occurring in the merger and acquisition
International harmonization is regarded as one of the important approach under which all
standardized laws and the regulations will get combine in order to help an entity in return in
achieving all the desired aim and target on a global level (Genkova and Gajda, 2017). Role of an
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entity gets increases with the passage of time as the scope of an entity gets increases when they
face external complexities which will enhances their overall role in the external business
environment.
Harmonisation is essential in order to maintain the fairness and transparency in the work
of an individual which needs to be improved with the time as this is essential for an entity in
considering various fact and figures about the external market which would help an entity in
enhancing all their core competencies in order to accomplish al their desired aims and targets.
Merger and acquisition is regarded as one of the important concept that creates lots of
external market changes in he existing performance of a entity that needs to be regulated wit the
passage of time (Li and et. al., 2016). An entity owner choose to amalgamate their existing
business using two important approaches such as mergers and acquisition that depends on the
financial condition of an entity.
There are various reasons responsible for adopting this kind of approach as the external
market changes imposed on an entity will disturb their existing business processes that needs to
be improved with the time for which an entity harmonize all the financial reporting standards in
order to induce their overall productivity (Genkova and Gajda, 2017). The essential reason
behind international harmonization in the merger and acquisition field is to eliminate all kinds of
international differences arises among different economies. Harmonisation process used by an
entity is to simplify the complex process of financial reporting processes used by an entity that
needs to be managed with the time as enhancing existing processes is important in order to
deliver right amount of information supplied by an entity from one end to another.
Financial statements prepared by an entity is to reflect their overall financial performance
from a particular time period in the business (Huang, Zhu and Brass, 2017). Utilising various
financial reporting standards will improves the recording of all the financial statements. It is
essential to record all financial information in the statements in order to depict true performance
of an entity as on global level an entity will present all their capabilities in front of external
market users in order to teal their attention towards their business.
In merger and acquisition of a company in different economies will creates lots of
complexities in terms of differences arises in their culture which will affect their overall
performance and restricts their capabilities in order to grow more. The difference of culture is the
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biggest problem faced by an entity who have pass through this particular phase due to poor
financial conditions (Baye, Pagel and Wey, 2016). Financial comparison will get easy by
following appropriate standards in improving the existing performance of an entity by adopting
various rules and the regulations prescribed by the legal authority in improving existing
performance of an entity. It is essential for an entity in order to deliver important information of
their business by creating a good communication channel among the external market users. The
major emphasise of an entity is on adopting IFRS rules in eliminating all kinds of current
deficiency lies in the system. Identification of all kinds of errors.
It can be said that a entity follows various principles of IFRS will help itself in
maintaining higher level of consistency in their work in order to achieve desired aims and targets
by linking all their aims and targets with the variety of International financial reporting
standards. Use of al these standards is essential in order to grab higher market advantages in the
external business environment.
In the process of amalgamation, social security is the biggest issue faced by an entity who
chooses this particular option in order to cover up their weaknesses through acquisitions or
showing their power through merger will created unique identity of an entity in the external
market (Endenich, Hoffjan, Schlichting and Trapp, 2016). But, internally social security of all
the employees of the business needs to be managed with the time that an entity need to pay off
all their costs by providing additional benefits to all the employees by providing pension
benefits. This benefits will help an employee in changing their resistance to change into their
positive attitude.
CONCLUSION
It can be summarised from the above report that international harmonisation is essential
in order to avoid all kinds of international differences lies at the global level. This report alos
stresses on analysing different economies in order to ascertain the impact of mergers and
acquisitions in different countries like UK,USA,Germany and Japan.
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