Abstract

http://ssrn.com/abstract=427000
 
 

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The Role of Accounting in the German Financial System


Christian Leuz


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Center for Financial Studies (CFS); University of Pennsylvania - Wharton Financial Institutions Center; CESifo Research Network

Jens Wüstemann


University of Mannheim - Business School

June 2003

CFS Working Paper No. 2003/16

Abstract:     
This paper describes and analyzes the role of financial accounting in the German financial system. It starts from the common (international) perception that German accounting is rather uninformative. This characterization has its merits from the perspective of an arm's length or outside investor and when confined to the financial statements per se. But it is no longer accurate when a broader perspective is adopted. The German accounting system exhibits several arrangements that privately communicate information to insiders, notably the supervisory board. Due to these features, the key financing and contracting parties seem reasonably well informed. The same cannot be said about outside investors relying primarily on public disclosure. A descriptive analysis of the main elements of the Germany system and a survey of extant empirical accounting research generally support these arguments.

Number of Pages in PDF File: 51

Keywords: Accounting, Disclosure, Germany, Standards, Survey

JEL Classification: M41, M47, G34, D82, K22

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Date posted: September 21, 2003  

Suggested Citation

Leuz, Christian and Wüstemann, Jens, The Role of Accounting in the German Financial System (June 2003). CFS Working Paper No. 2003/16. Available at SSRN: http://ssrn.com/abstract=427000 or http://dx.doi.org/10.2139/ssrn.427000

Contact Information

Christian Leuz (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-1996 (Phone)
HOME PAGE: http://chicagobooth.edu/fac/christian.leuz
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
HOME PAGE: http://www.nber.org
European Corporate Governance Institute (ECGI)
Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Center for Financial Studies (CFS) ( email )
Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
University of Pennsylvania - Wharton Financial Institutions Center
3641 Locust Walk
Philadelphia, PA 19104-6218
United States
CESifo Research Network
Poschinger Str. 5
Munich, DE-81679
Germany
Jens Wüstemann
University of Mannheim - Business School ( email )
Schloss, Ostflügel
D-68131 Mannheim
Germany
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