Measurement of Formal Harmonisation in Accounting: An Exploratory Study

Abstract

Extant research in evaluation of accounting harmonisation has mainly focused on measurement of harmonisation and evaluation of its impact on share market indicators. Within these themes, however, researchers have been studying the impact of formal harmonisation on material harmonisation, and share prices and returns. Given the important role formal harmonisation plays in accounting harmonisation, this study introduces a methodology for the measurement of formal accounting harmony between countries. The methodology introduced in this paper can be used to identify areas of harmony or disharmony for policy-making purposes. It also provides means of gaining valuable insights into the nature of harmony or disharmony between different countries' accounting rules. Finally, it creates new grounds for examining various other aspects of accounting harmonisation.

Implementing IFRS from the perspective of EU publicly traded companies

“…Other approaches to studying country harmonization have used factor analysis to cluster countries based on the similarities of the accounting practices they follow (Doupnik, 1987;Doupnik & Taylor, 1985;Frank, 1979;McKinnon & Janell, 1984;Rahman, Perea, & Ganeshanandam, 1996). Kasanen, Kinnunen, and Niskanen (1992) tested alternative models for predicting IAS profit figures from financial statements based on (non-IAS) Finnish accounting regulations.…”

Accounting Practice Harmony, Accounting Regulation and Firm Characteristics

“…Rahman et al (1996) examined the measurement of regulation harmony. Others concentrated on the reasons that give rise to different levels of regulation harmony.…”

“…Mandatory disclosure and measurement data were collected using the instrument of Rahman et al (1996), that included requirements of the relevant acts, listing rules and accounting standards that existed in 1993. The instrument was adapted to include only those requirements for which information would normally be available from annual reports.…”

“…Finally, there are rules that are formulations of selfgoverning institutions such as the stock exchange listing requirements. This indicates that not only what the rules require but also how effectively the rules are enforced can influence the level of practice disharmony between countries (Rahman et al, 1996). Consequently: H1: Ceteris paribus, the level of practice harmony is positively associated with the level of regulation harmony.…”

Measuring the Degree of International Harmonisation inSelected Accounting Practice: the Case of Tunisian Firms

“…The target population includes allfirms. Thestudy sample contains all listed companies whose data are available -table 1 (54 annual reports from firms listed in Tunisian markets and also 54 annual reports from companies listed in international exchange markets-London and Paris exchange markets) Rahman et al 1996). However, the majority of the empirical research has investigated de facto harmonisation at a point in time (Archer et al 1996;McLeay et al 1999; Van der Tas 1992; van der Tas 1988; Walton 1992).…”