Implications of the 'IAS Regulation' for Research into the International Differences in Accounting Systems

Accounting in Europe, Vol. 3, pp. 187-217, 2006

35 Pages Posted: 19 Sep 2006

See all articles by Thorsten Sellhorn

Thorsten Sellhorn

Ludwig-Maximilians-Universitaet (LMU) Munich

Sylwia Gornik-Tomaszewski

St. John's University - Department of Accounting and Taxation

Abstract

Meek and Thomas (2004) call for research on the continued relevance of 'rediscovered' dichotomous accounting classifications. We provide such evidence by examining how developments surrounding the 'IAS Regulation' (1606/2002) influenced international differences in accounting systems in the European Union. Since sufficient post-2005 IFRS data is not yet observable, we propose an initial re-classification of accounting systems based on evidence available to date, i.e. the degree of implementation of the IAS Regulation in the Member States. Consistent with Nobes (1998), we find that the degree of public accountability to outside investors (the 'public/private' criterion) is becoming the primary differentiator for accounting systems in Europe, surpassing country-level variables such as legal system and culture. The distinction between consolidated and individual financial statements is the second emerging differentiator. While consolidated accounting is becoming more uniform across countries, cross-country cultural differences are most likely to persist in individual accounting. Based on our analysis we highlight two important areas of future research beyond the consolidated financial statements of listed firms (e.g., Nobes, 2005; Schipper, 2005). First, at the country level, the interaction of IFRS and individual financial statements will need to be re-assessed. In addition, research could help introduce a degree of differentiation into financial reporting regulation for unlisted firms, because these firms are not a homogeneous group. Also, the convergence of national GAAP systems with IFRS will benefit from fresh research insights. Second, at the firm level, future research could analyze the extent to which the determinants and consequences of IFRS adoption, an area well-researched for publicly traded firms (e.g., Cuijpers and Buijink, 2005), generalize to unlisted firms. Such research will help detect emerging patterns of accounting systems within an international context. It will generate insights into the disconnect of consolidated accounts from national influences, the degree of uniformity of consolidated accounts among international firms, the continued relevance of traditional classifications of international accounting systems for individual accounts and accounts of unlisted companies, and the convergence of national standards with IFRS.

Keywords: Accounting classification, IFRS, IAS Regulation, consolidated and individual accounts, research

JEL Classification: M41, M44, M47, G38

Suggested Citation

Sellhorn, Thorsten and Gornik-Tomaszewski, Sylwia, Implications of the 'IAS Regulation' for Research into the International Differences in Accounting Systems. Accounting in Europe, Vol. 3, pp. 187-217, 2006, Available at SSRN: https://ssrn.com/abstract=930626

Thorsten Sellhorn (Contact Author)

Ludwig-Maximilians-Universitaet (LMU) Munich ( email )

Ludwigstr. 28 RG IV
Munich, Bavaria 80539
Germany
+49(0)89-21806264 (Phone)
+49(0)89-21806327 (Fax)

HOME PAGE: http://www.rwp.bwl.uni-muenchen.de/personen/professoren/sellhorn/index.html

Sylwia Gornik-Tomaszewski

St. John's University - Department of Accounting and Taxation ( email )

The Peter J. Tobin College of Business
8000 Utopia Parkway
Queens, NY 11439
United States
718-990-2499 (Phone)

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