The Persistence of International Accounting Differences as Measured on Transition to IFRS

Accounting and Business Research, January 2015

Posted: 11 Jan 2015

See all articles by Niclas Hellman

Niclas Hellman

Stockholm School of Economics

Sidney J. Gray

University of Sydney Business School

Richard Donald Morris

UNSW Australia Business School, School of Accounting

Axel Haller

University of Linz - Institut für Revisions, Treuhand-und Rechnungswesen

Date Written: January 7, 2015

Abstract

The international accounting classification literature emphasises the importance of understanding how institutional factors shape accounting regulations and practices. With the mandatory adoption of International Financial Reporting Standards (IFRS) in the European Union and Australia in 2005, our empirical study examines whether three international accounting classification systems relating to equity financing, law and culture still had merit as measured on transition to IFRS and explore whether they are effective in grouping accounting systems. Using IFRS as the yardstick, we find statistically significant differences in the measurement of shareholders’ equity as between strong (Class A) versus weak (Class B) equity financing systems, common law versus code law systems and cultural systems based on ‘Anglo’, ‘Nordic’ and ‘More Developed Latin’ cultural groups. With regard to the measurement of net income, however, we find statistically significant differences only in respect of strong (Class A) versus weak (Class B) equity financing systems. Our findings demonstrate that traditional international accounting system differences still persisted at the time of IFRS adoption even after long periods of harmonisation and growing international accounting convergence.

Keywords: international accounting, IFRS, accounting systems, accounting harmonisation, international accounting classification

JEL Classification: M41

Suggested Citation

Hellman, Niclas and Gray, Sidney J. and Morris, Richard Donald and Haller, Axel, The Persistence of International Accounting Differences as Measured on Transition to IFRS (January 7, 2015). Accounting and Business Research, January 2015, Available at SSRN: https://ssrn.com/abstract=2547587

Niclas Hellman (Contact Author)

Stockholm School of Economics ( email )

Sidney J. Gray

University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia

Richard Donald Morris

UNSW Australia Business School, School of Accounting ( email )

Sydney, NSW 2052
Australia

Axel Haller

University of Linz - Institut für Revisions, Treuhand-und Rechnungswesen ( email )

Altenberger Strasse 69
A-4040 Linz
Austria

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