International Differences in Accounting Practices Under IFRS and the Influence of the US

Abstract

This paper expands prior International Financial Reporting Standards (IFRS) accounting systems’ classifications to a broader set of 27 countries where IFRS adoption is a widespread practice, as well as the US. It examines the issue of whether a US model of accounting that includes countries which have adopted IFRS exists. The results suggest a classification distinguishing between three groups of countries based on the similarity of their accounting practices: 1) Australia and New Zealand; 2) US‐influenced countries; and 3) South Africa, Oman and European countries. This study contributes to the literature not only by providing evidence of differences in accounting practices to a broader set of countries, but mainly by suggesting an economic explanation of the existence of accounting choices. In particular, economic proximity to the US may be an important factor influencing accounting practices in some countries, even after IFRS adoption.

The role of the national institutional environment in IFRS convergence: a new approach

“…We identify that 33 articles specifically discuss the outcomes of IFRS adoption such as the readability of financial statements (Richards and van Staden, 2015;Cheung and Lau, 2016), predictability of earnings (Bodle et al, 2016;Palea and Scagnelli, 2017), earnings transparency (Ye et al, 2018), audit (Nam, 2018), usefulness and accuracy of goodwill disclosure (Amor os Mart ınez and Cavero Rubio, 2018), and information asymmetry of the stock market (Abad et al, 2018). Additionally, numerous studies investigate IFRS-related issues in emerging markets such as Jordan (Al-Htaybat, 2018), Malaysia (Che Azmi and English, 2016), Oman (Lourenc ßo et al, 2016), Brazil (Nakao and Gray, 2018), and China (Yang et al, 2018;Ye et al, 2018). However, there is little attention paid to the influence of one of the most important determinants, the institutional environment, on the consequences of IFRS convergence in the Asia-Pacific region.…”

Influencing factors of accounting practices: a case study of New Zealand

“…Nobes (1998) classified accounting systems of fourteen countries in two major classes, but Nobes (2011) first classified accounting systems of same fourteen countries based on practices and in the context of IFRS by using the large number of companies on most recent data. The recent study of Lourenco et al (2018) analysed accounting practices of 27 countries where IFRS is widely adopted and the result from their cluster analysis identified three group of countries: Australia and New Zealand; USA-Mondal 123 influenced countries; and South Africa, Oman and other European countries. However, Radebaugh et al (2006), Riahi-Belkaoui (1995), Nobes and Parker (1995) focused on some reasons for differences of accounting practices in different countries but they are failed to develop any theory for those reasons.…”

“…However, the practices of accounting standards may not be same in every country, and the different aspects of the respective country influence the accounting practices. Surprisingly, IFRS adopted countries have the influence of US GAAP (Lourenco et al, 2018). Therefore, researchers argued for different influencing factors (Iqbal, 2002;Walton et al, 2003;Doupnik and Perara, 2007;Roberts et al, 2008;Nobes and Parker, 2010) those play an influential role in accounting practices.…”

The Effects of Fair Value on the Matching of Revenues and Expenses: The Case of Asset Revaluations

“…Secondly, we chose the U.K. in particular, because as of 2000, the U.K. requires firms that voluntarily choose to upwardly revalue to continue to revalue their operating assets (at an interval no longer than five years). Finally, we restrict our study to just one country, because even with similar institutional environments, cross country differences persist that affect the usefulness of any particular accounting standard (Barth & Clinch, 1996;Black, et al, 1998;Lourenço et al, 2018).2 F 3 Empirically, our first step is to perform a Propensity Score Matching procedure that matches firms that upwardly revalue their fixed operating assets to those that did not upwardly revalue, based on those firm characteristics Barlev et al (2007), among others, identify as being associated with those firms that upwardly revalue. Next, we regress changes in revenues on changes in operating expenses to estimate their association and find evidence that the associations are stronger for revaluation firms than non-revaluation firms, particularly in highly inflationary industries.…”

“…For example, even though accounting standards in the U.K. and Australia are very similar and apply upward revaluations in similar ways,Lourenço et al (2018) show that U.K. and Australian firms belong to different clusters of countries in terms of accounting practices after IFRS adoption. As an additional test, we also tested whether upward asset revaluations improved the matching of revenues and expenses in Australia, but found no evidence supporting that premise, indicative of the differences noted byLourenço et al (2018).Electronic copy available at: https://ssrn.com/abstract=3570210…”