Dennis Chambers, University of Illinois, Urbana-Champaign Chee W. Chow, San Diego State University, San Diego Michael B. Clement, University of Texas ± Austin, Austin Bryan Cloyd, University of Illinois, Urbana-Champaign Eugene Comisky, Georgia Institute Tech, Atlanta Teresa Conover, University of North Texas, Denton Terrence E. Cooke, University of Exeter, England Robin Cooper, Emory University, Atlanta
A number of studies have attempted to evaluate the IASC's internationalaccounting harmonization efforts (Nair and Frank, 1981; Evans and Taylor, 1982; McKinnon and Janell, 1984; Doupnik and Taylor, 1985; Doupnik, 1987; Nobes, 1987, 1990; IASC, 1988; Van der Tas, 1988). A review of these studies reveals that the majority of them have evaluated the IASC's internationalaccounting harmonization efforts at regulatory or standard-setting level in both developing and developed countries. The few studies (Evans and Taylor, 1982; Nobes, 1987, 1990; Van der Tas, 1988) which examined international harmonization ofaccounting practices at company level have only used reports of corporations in developed countries. No study appears to have measured (a) the extent to which corporations in developing countries comply with the IASC standards, or (b) the impact ofthe IASC standards on theaccounting measurement and disclosure practices of enterprises in developing countries. These omissions are lamentable for a number of reasons. Firstly, most accounting professions in developing countries do not have national standard-setting bodies, hence, the majority of them simply adopt the IASC standards as issued. Given this backdrop, any harmonization study at standard-setting level in these countries is futile. The fundamental issue is the extent to which enterprises in developing countries conform to the IASC standards. Secondly, the target oftheinternational harmonization effort is to have comparable financial reports published by enterprises in different countries and not merely having internationally harmonized accounting standards. Thirdly, the real challenge to the IASC members from developing countries and the ultimate test of their pledge of ``best endeavour,'' does not lie in the adoption ofthe IASs, but in ensuring that the IASC standards adopted are observed by enterprises in their respective countries. Finally, over 80 percent ofthe IASC members are from developing countries and the majority of them have adopted the IASs.
Cairns discusses his survey methods and the survey findings at considerable length. In addition, he provides useful sketches oftheaccounting requirements of 80 countries in all regions ofthe world, and, in one of his chapters, he elaborates upon the technical accounting issues in IAS financial statements. The book also contains much information about the background and work ofthe IASC.
This position paper issued last November by CGA-Canada argues for the adoption ofInternationalAccounting Standards in Canada. ``Many interested parties are today proposing that Canadian standards be harmonized with FASB standards, especially because of Canada's close tied with the United States,'' but, the article argues, ``there are many compelling reasons why it would not be prudent for Canada to adopt FASB standards'' (pp. 5±6). The FASB's standards, it asserts, are ``the result of a `closed process' designed to accommodate U.S. interests,'' and ``they have been established primarily for the benefit of investors to the exclusion of other groups in society interested in corporate performance'' (p. 6). Other objections to the influence in Canada ofthe FASB's standards are that they are ``rule-oriented and prescriptive'' and that they respond to the ``very litigious environment'' in the U.S. The article seems to be favorably disposed toward the ``fairness exception'' in IAS 1.
This is an excellent and comprehensive handbook, now on its second edition, on the history, structure, and operation ofthe IASC and covering all ofthe topical areas encompassed by the extant InternationalAccounting Standards (IASs) and Interpretations issued by the Standing Interpretations Committee. The author, David Cairns, is the foremost authority on the subject, and he is to be commended for compiling a work that is rich in description, analysis, and criticism. It will be of great value to all who are interested in how the IASC functions and in furthering the reach of IASs.
This special edition ofthe semiannual journal, Pacific Accounting Review, contains 23 Millennium Essays to celebrate New Zealand's ``unique position as first into the future,'' for an outpost on New Zealand territory was ``the first inhabited place in the world to see the sunrise ofthe new millennium'' (p. i). The short essays, ranging between 3 and 15 pages each, were written by ``leading academics and practitioners from around the globe, [and] while each essay is unique, there is one common theme, and that theme is change'' (p. i). Sixteen ofthe essays were invited by the editor. Three research articles unrelated to the themes ofthe essays occupy 60 pages ofthe issue.
Abstract: Improved accounting for intangible assets is one ofthe major challenges to future financial reporting. Conventionally, resources spent on intangibles such as knowledge, design, licenses, and trademarks have been expensed and hence treated merely as costs and not as investments with book values. Such an arbitrary way of dealing with intangible resources is believed to have increasingly reduced the value-relevance of financial reporting as the importance of intangibles in the economy has increased over time. Intangible resources that meet certain criteria for asset recognition should be capitalized as assets and their costs amortized over the best estimate of their useful lives. In this article, we argue that the value-relevance of financial statements would be further improved if previously expensed costs are partly reversed and capitalized if, at a later period, the intangible item in question meets the asset recognition criteria. The increased income variation due to reversed expenses would be a signal of earnings potential and risk.
Abstract: This study shows that: (1) In addition to past earnings, incomplete contracts disclosed in the prospectuses of construction firms' IPOs is an important explanatory variable of earnings forecasts made by investment bankers. (2) Earnings forecasts can explain the offer prices set by investment bankers in the IPOs of construction firms. (3) Stock returns subsequent to the initial public offering are predictable on the basis of incomplete contract information available in the prospectuses. This last finding is robust to the inclusion of control variables for ex ante uncertainty, size, book-to-market, leverage, and earnings-to-price effects. The association between stock returns subsequent to the equity offering and incomplete contracts is consistent with both market inefficiency and the presence of risk factors for which investors expect greater underpricing ofthe IPO.
Fourth, while the book provides useful lists of pros and cons relating to different tax issues, it generally does not clarify the criteria that readers could use for effective decision making. For example, rather than merely listing the pros and cons of using foreign branches versus foreign subsidiaries ( pp. 74±75), it would be useful if the book had helped clarify the conditions under which one organizational form is preferred over the other.
Although I feel that the analysis chapters focus too heavily on fundamental analysis, as a result of reviewing the text I am more convinced than ever that every student ofaccounting or finance should learn the material taught in Parts I and III of this text. Although the authors do concentrate on the financial statements, they also fully integrate the cultural aspects of businesses into the study of financial reporting. This promotes a better understanding of business practices, in general, and a comprehensive understanding of why just restating financial statements would not give a full picture of a company that operates in a foreign country. In other words, students are taught in Part III to look beyond the numbers in order to understand the company, the culture, and the country.
The purpose ofthe book, to present the early formative influences ofthe development of financial reporting regulations for limited liability companies in a number of Western European countries, is surely achieved, even if, for certain countries, such as Italy, it would be necessary to trace theaccounting history for centuries before the Industrial Revolution. The insights provided might be used primarily for scientific, educational, and practical purposes, by scholars, students, and policy-makers, but they can also offer a potential basis for further research. The book shows that European accounting, because of its diversity, is a fascinating subject, enabling great research opportunities. The editor has done a remarkable job in terms of assuring a cohesiveness ofthe collection and of making the material in the chapters flow smoothly, no easy task when one is dealing with people from 11 countries who do not speak English as their native language.
The booklet makes clear that the French have called upon the national treasure ofthe French language as the arbiter of which internationalaccounting standards may be used in the consolidated accounts of French companies. It is reported on page 34 that a 1998 amendment to the company law allows a listed company to ``draw up its consolidated accounts in accordance with international standards translated into French.'' As the IASC's standards are already available in a French translation and it is unlikely that anyone will ever undertake to translate the encyclopedic U.S. generally accepted accounting standards into French, the issue has been neatly settled.
. Analysts express a desire for US GAAP/IAS reconciliations not so much because they actually use the reconciled amounts but because they do not trust Swedish accounting as much as US GAAP/IAS. The reconciliation is viewed as an ``insurance policy'' against the potential for poor quality in the Swedish accounting system. Still, analysts' reports show that adjustments are made based on the reconciliation information.
In our experience, the need for information on accounting theory and practice in other countries is increasing. Some years ago, as the European Single Market took shape, there were a number of books published that provided guidance, and the first edition of European Accounting Guide was one such book. However, European Accounting Guide stands out from the crowd in two key respects: in a single volume it provides comprehensive coverage of key European countries, and it has been kept up to date. It has few, if any, peers. Consequently, it is the book that sits on our desks (rather than tucked away in the library), and it is the book to which we refer inquirers who are in search of a high-level view ofaccounting in another European country. It will not provide in-depth answers as a substitute for advice from a local practitioner, but it will help formulate what questions need to be asked.
This paperback volume contains a dozen papers presented at a workshop held in June 1994, which was hosted by the Department ofAccountingofthe Universitat de Valencia and sponsored by Comparative International Governmental Accounting Re- search (CIGAR). Three broad themes permeate the papers: (1) governmental accounting standards and practices in a country (Germany, the UK, Scotland, Italy, Poland, China, and New Zealand) (2) comparative governmental accounting standards and practices (OECD countries and three Scandinavian countries), and (3) the public sector audit and the accountability of governments (UK and Dutch experiences). All ofthe papers are in the English language.
The book gives copyright credit to PricewaterhouseCoopers, for most ofthe descrip- tion and explanation seems to have been taken from, or is heavily based upon, the firm's 830-page handbook, Understanding IAS (see Capsule Commentaries, Vol. 34, No. 3, p. 457). It is not made clear whether material that goes beyond the contents ofthe handbook, which was published in October 1998, was supplied by the author of this volume, by the firm, or by both. The author has not written a preface, so it is not evident how the volume was compiled and also how it was designed for use in university curricula. But it obviously represents an authoritative, detailed source of IASs for any course that makes extensive use of them. The volume would also be very useful to accounting practitioners, chief accounting officers, and financial executives whose clients or companies have a significant international focus.
There are too few vehicles for ``think'' papers on accounting and its role in society, and this special edition of Pacific Accounting Review helps fill the void. Even though the new millennium will not arrive until January 1, 2001, the pretext amply justifies this collection of interesting and provocative essays. The journal's web site is at: www-par.massey.ac.nz.
and plan participants. Most ofthe regulatory interest has been directed towards disclosure issues. The effect of culture on disclosure practices has been investigated often with the intent of determining the potential for harmonization ofaccounting standards. Zarzeski (1996) found that both the secretiveness of a culture and market forces could affect disclosure behavior. In a study focusing on employee benefits, Needles et al. (1991) hypothesized that regulatory differences across countries would appear in the disclosures for pensions. However, results ofthe study indicated that the overall degree of regulation for a country was not reflected in the pension disclosure practices. The countries studied appeared to exhibit fairly similar disclo- sures. A more recent examination by Street and Gray (1999) notes that relatively few differences exist in pension disclosures pursuant to IAS 19 when compared to those prepared under U.S. GAAP. This finding leads us to question the applicability of pension disclosures as a means to examine any underlying cultural differences.
The fourth chapter deals with public sector resources, their types and classification. In the public sector, besides typical resources, there are substantial non-financial resources, such as infrastructure, cultural heritage resources, natural resources, military resources, intangibles, etc. The author carries out an analysis that allows the reader to draw a distinction between the different types of assets from the perspective of public sector accounting. As a result, the definition of an asset is generalized to define it as ``an economic resource that enhances prospects for accomplishment ofthe mission of a given economic entity, being under control of this entity as a result of past events, which allowed to take over its control or to produce it by processing other resources . . . .'' This is one ofthe many definitions proposed by the author which reveal the innovativeness and creative value of his thought.
First, the authors made a selection of six Middle East Islamic countries (Egypt, Saudi Arabia, Turkey, Bahrain, the United Arab Emirates, and Qatar) with a total population of 151 million, and they decided to exclude, apart from Israel, seven Islamic countries with a total population of 110.6 million (Jordan, Lebanon, Syria, Iran, Iraq, Oman, and Kuwait). These latter Islamic countries adopt mainly a different economic order than the countries chosen. Iraq and Syria are still implementing a socialist regime, Iran is implementing an Islamic economic order, and Jordan is turning to a more liberal economy. The authors did not explain the reasons for their exclusion.