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  The International Journal of Accounting
1997 Issues

Vol 32 No 1 1997
Vol 32 No 2 1997
Vol 32 No 3 1997
Vol 32 No 4 1997

Volume 32 Number 1 1997


Cash Flow Statements: An International Comparison of Regulatory Positions
by R.S. Olusegun Wallace, Mohammed S.I. Choudhury and Maurice Pendlebury

Abstract: Our paper compares the standard documents on cash flow statements (DFSs) from five nations and the IASC. We report on substantial differences among the standard setting bodies from the five nations and the IASC on the one hand and their constituents on the other. There are variations in regulatory postures on almost every aspect of the cash flow statement (DFS). We identify different ways of categorizing cash flows, alternative formats for presenting cash flows from operating activities among others but do not make personal choices because we do not seek to play the role of standard setters. We conclude that the quest for international harmonization of reporting practices cannot be easy.

Anglo-Saxon and German Life-Cycle Costing
by Alfred Gutschelhofer and Hanno Roberts

Abstract: This paper discusses the complementarily of the Anglo-Saxon and German approaches to life-cycle costing. It is argued that the relationship between the two life-cycle costing approaches can be found in the direct costing format of the income statement. Given the fact that life-cycle costing itself is very little known in German cost accounting, the German method of multiple step fixed cost accounting is considered the closest equivalent to life-cycle costing. The combination of the two approaches can be further strengthened by integrating the multiperiod decision-oriented cost accounting developed by Paul Riebel.

Capital Charging and Asset Revaluations: New Choices in Governmental Financial Reporting?
by Martin T. Lally and G. Stevenson Smith

Abstract: Within the last ten years, the New Zealand government has reformed itself from a system using antiquated management and accounting methods into a system that has attracted attention from government officials around the world. The new age methods adopted within the New Zealand government are based on a more business-like method of operations, and they include managerial empowerment, accrual accounting, asset revaluations, capital charging, and output budgeting. The changes in governmental financial reporting were made to support the new  management methods. This paper provides a detailed review of how capital charging and asset revaluations are used within the New Zealand public sector. Additionally, it provides an explanation of why it would be very difficult to adopt these successful methods in governments founded on a U.S. constitutional model.

Factors Affecting an Analyst Forecast Revision--Taiwan and the United States: A Comparison
by Glen D. Moyes, Kyungjoo Park, Andrew Minglong Wang and Patricia A. Williams

Abstract:  The purpose of this study is to compare factors affecting analyst forecast revisions in Taiwan and the United States. Identical questionnaires were sent to practicing analysts in both countries to determine the type and source of information used in revising a forecast of earning per share for a firm. The findings indicate that Taiwanese analysts rely more on industry related data, government policy and secondary information sources and less on public and private disclosures by management that U.S. analysts. These results reflect socioeconomic factors and the stage of development of the financial analysis industry of Taiwan.

Organizational Culture and Budget Related Behavior: A Comparative Contingency Study of Three Local Government Organizations
by Andrew Goddard

Abstract: The study attempts to establish the contingent relationship between culture and budget related behavior. Multiple aspects of culture were investigated including national, corporate, professional, and hierarchical components. The paper is the fourth in a series investigating the relationship in three local government organizations in the United Kingdom, British Canada, and French Canada. This paper hypothesises the influence of each of the sub cultures on budget related behavior.  Results indicate that corporate and hierarchical cultures are a major influence, professional cultures are a lesser influence, and that national culture appears to have little of no influence.

International Accounting Education: Insights from Academicians and Practitioners
by Zabihollah Rezaee


Two Reviews: International Accounting, Financial Reporting and Analysis: A U.S. Perspective
by Allan Be. Afterman

A Guide to Applying International Accounting Standards
by David Cairns
Reviewed by Belverd E. Needles, Jr.

Volume 32 Number 2 1997


From the Editor: Vernon K. Zimmerman 1928-1996
by Andrew D. Bailey, Jr.

An Investigation of Market Response to Earnings Announcements: Multinational Firms versus Domestic Firms
by Anges Cheng, K. Hung Chan and Wood Liao

Abstract: Capital market responses to accounting earning announcements have been well documented in the accounting literature. These responses may vary, with firm size, analyst following and other variables. This study investigates the effect of multinational operations as a proxy for operational and informational complexity on market responses to earnings announcements. The results show that multinational operations provide significant explanatory power for market responses to earnings announcements after controlling the factors of firm size and analyst following.

Problems of Accounting Reform in the People's Republic of China
by Yin Chen, Peter Jubb and Alfred Tran

Abstract: The promulgation of the Enterprise Accounting Standard (EAS) in 1992 signified a major accomplishment in unifying accounting practices in the People's Republic of China (PRC) and harmonizing them with international practices. This article identifies and analyzes the problems encountered in the PRC since the implementation of the EAS in July 1993. These problems result from the accounting regulatory framework itself and the incongruity between the new accounting regulations and the prevailing socioeconomic conditions. Some possible solutions are discussed.

Social Financial Reporting in India: A Case
Poorna Hegde, Robert Bloom and Jayne Fuglister

Abstract: Social accounting in company annual reports within the framework of a socialistic pattern of industrial development is discussed. A public sector company (Steel Authority of India Limited) is examined with regard to the type, form, and content of social financial disclosures. Students are asked several questions about social accounting in India and in general. This case can be used in an Accounting Theory, Issues, or International course at the undergraduate or graduate level.

Payback: A Gulf Between Managerial Accounting and Financial Theory in Practice--A View from Accountants and Finance Officers in Ireland
by Mairead O'Brien

Abstract: This paper examines the payback model in capital investment decision making and advances our knowledge of how it is interpreted and implemented. Practices in Ireland's top 500 companies are reported and research findings suggest that the deficiencies normally accepted as hallmarks of the payback model are not necessarily present in practice. These results are of international significance because, as in many other countries, Ireland's top 500 companies consist of multinational subsidiaries and the largest locally owned companies.

The Perceived Importance of International Accounting Topics in the Asia-Pacific Rim: A Comparative Study
by John Stephen Sands and John Pragasam

Abstract: Past research generally addresses international accounting curricula in North America and Europe. The increasing international trade traffic and the strengthening of ties with Pacific Rim countries ranks this geographic region as one that should receive the most emphasis when developing international accounting skills. This study presents four culture areas and uses an ANOVA design to identify significant differences in participants' perceived importance of 35 international accounting topics included in prior studies. Significant results are found for 12 topics among these four areas. Cultural values, institutional consequences. and international influences are discussed as possible factors that have a significant impact upon the perceived relative importance of these 12 topics.

International Accounting Research: An Analysis of Thirty-Two Years from the International Journal of Accounting
by Belverd E. Needles, Jr.

Abstract: This study provides a thirty-two year historical perspective of international accounting research by presenting an analysis of the articles that have appeared in the International Journal of Accounting (formerly, the International Journal of Accounting, Education, and Research) and related monographs during the time period 1965 through 1996. The International Journal of Accounting was chosen for this study because it has the longest continuous history of published research in international accounting. It consists of six sections following the introduction. The second section analyzes all 768 articles that have been published in the journal and related monographs. The next three sections analyze the 263 articles devoted to the European region, the 183 articles devoted to the pacific region, and the 126 articles devoted to countries classified by the World Bank (1990) as economically developing, respectively. The analyses in each section classify the articles by research methodology, country, subject, time periods, and authors. The last section contains the conclusion. A completed annotated bibliography of all 768 articles with indexes by author, topic, country, and methodology is available on disk from the author.


Research in Accounting in Emerging Economies
Edited by R.S. Olusegun Wallace, John M. Samuels, Richard J. Briston and Shahrokh M. Saudagaran
Reviewed by Susan C. Borkowski

A History of Financial Accounting
by John Richard Edwards
Reviewed by Dale L. Flesher

Accounting Services, Growth, and Change in the Pacific Basin
by David L. Mckee and Don E. Garner
Reviewed by Donald M. Sartori

Volume 32 Number 3 1997

Editorial Comment: Andrew D. Bailey, Jr.


Cultural and Economic Influences on Current Accounting Standards in the People's Republic of China
by Lynford E. Graham and Chunyan Li

Abstract: Accounting Principles in the People's Republic of China have undergone dramatic reform since the 1970s. In moving toward a more market driven economy, the market structures and accounting rules have changed to the point that today many of the concepts and principles familiar in the most advanced economies are part of the Chinese regulations and laws. While China has forged many principles that are similar to Western and international practice, there are anomalies that may not be easily explained without a more detailed understanding of the cultural, economic and political environment now facing China. The principle of Guo Qing implies that change will be implemented only in conjunction with Chinese needs. As evidenced in the statutory restrictions on the value of certain contributed intangibles, the write-offs of accounts receivable and the discretionary write-downs of in inventory for lower-cost-or-market considerations, there remain some areas of accounting practice that Chinese historical, cultural, and economic circumstances encourage an inexplicable result. Additionally, there remain differences in perspective that are more attributable to history than to specific accounting rules.

Developing Accounting Standards on the Basis of a Conceptual Framework by the Chinese Government
by Zezhong Xiao and Aixiang Pan

Abstract: Contradictory to some existing theories, the Chinese government has been developing accounting standards on the basis of a conceptual frame work (CF) titled Accounting Standards for Business Enterprises (ASBE). This article evaluates the role of the ASBE and explores the potential benefits and risks of and the reasons for the adoption of a government-controlled and CF-based approach. We argue that a CF can play an important role even accounting standard-setting is controlled by the government; however, the ASBE provides an insufficient basis for developing accounting standards.

Accuracy of Forecast Information Disclosed in the IPO Prospectuses of Hong Kong Companies
by Bikki Jaggi

Abstract: Hong Kong and international investors are interested in the accuracy of forecasts disclosed in the Initial Public Offering (IPO) prospectuses issued by Hong Kong companies. This study examined bias as well as accuracy of IPO forecasts disclosed from 1990 to 1994.  The results of this study show that unlike IPO forecasts disclosed in most other countries, IPO forecasts disclosed by Hong Kong companies do not overestimate their earnings and/or dividends. Instead, the bias seems to be toward underestimation. The level of forecast accuracy is also quite high and compares favorably with that of most other countries. The results show that the level of accuracy is to some extent influenced by the number of years the company has been in business. No other company-specific variable seems to have any influence on the accuracy level. On an overall basis, the findings of this study can be interpreted to mean that IPO forecasts disclosed by Hong Kong companies provide reliable information.

The Transfer Pricing Concerns of Developed and Developing Countries
by Susan C. Borkowski

Abstract: Are concerns about transfer pricing, income shifting, and inequitable tax allocations exaggerated in recent accounting and tax literature? A survey of 47 countries provides evidence that transfer pricing issues are of genuine and increasing concern to the governments of both developed and developing countries.   One recommendation to curtail transfer pricing manipulations is to develop standardized transfer pricing policy and procedures to be implemented globally. A second suggestion is to mandate increased disclosures about the magnitude and effects of transfer pricing on subsidiary income and tax liabilities in the financial reports of transnational corporations engaging in cross-border transactions. However. as long as some countries continue to operate as tax havens, income shifting by TNCs is tacitly encouraged and will continue unabated.  Concurrent with globally acceptable standards must he the gradual elimination of tax rate differentials that contribute to income shifting and the inevitable misallocation of tax revenues.

An Exploratory Investigation of Industry Specialization of Large Audit Firms
by Ignace De Beelde

Abstract: Studies of the supply side of the audit market generally focus on concentration in the audit industry, often linked with discussions of audit fee level or audit quality. The number of studies that focused on industry specialization is more limited. This paper's primary topic of interest is industry specialization but includes overall concentration as well significant overrepresentation of an audit firm in an industry might mean that the firm has developed an audit approach specifically adapted to the industry and gives the audit firm a competitive advantage over other audit firms. Auditor data were collected for 11,611 large companies in 14 countries, both CR4 and a measure for specialization were calculated. The results are that concentration is variable over countries and industries, and presence of Big Six audit firms in specific industries is not consistent over countries. Differences seem to exist between audit firms, however, with respect to their specialist or generalist nature.

Advancing The Harmonisation of International Accounting Standards: Exploring an Alternative Path
by Peter Carlson.

Abstract: The IASC has been actively pursuing the goal of international accounting harmonisation for two decades. Whilst there has been much productive output, little progress has been made in achieving global uniformity in accounting. In attempting to explain the lack of progress, this paper adopts the view that the cause of stagnation is the process used to mobilise harmonisation. The IASC has only recently acted upon the fact that there has not been enough examination of the processes and structure of the IASC. Yet analysis of the mobilisation process reveals a number of flaws, among these, concerns about the institutional legitimacy of the IASC. The consequence of these flaws is that uniformity in reporting practices is unlikely unless alterations are made to the mobilisation mechanism, in this instance the IASC. This paper proposes a restructuring of the IASC and the adoption of the convention method as a means to remedy the perceived flaws in the current process.


Environmental Accounting for the Sustainable Corporation: Strategies and Techniques
by Daniel Blake Rubenstein
Reviewed by Teresa Trapani

Readings in Accounting in the European Union
Edited by Antonio Socias
Reviewed by Robert K. Larson

Accounting Education in India
by Bhabatosh Banerjee
Reviewed by Richard M.S. Wilson

Volume 32 Number 4 1997


Factors Affecting Transfer Pricing and Income Shifting Between Canadian and U.S. Transnational Corporations
by Susan C. Borkowski

Abstract: An analysis of organizational. environmental, and financial factors indicates that income shifting may occur among TNCs in the United States and Canada. Some differences in rates of return are partially explained by the larger U.S. TNCs, which experience higher rates of return and prefer non-market methods. Smaller Canadian TNCs, with lower rates of return, prefer market methods.

Examination of U.S.-Based Japanese Subsidiaries: Evidence of the Transfer of the Japanese Strategic Cost Management
by Y.S. Al Chen, Timothy Romocki and Gilroy J. Zuckerman

Abstract: As a result of global competition, many Japanese companies are now operating in the United States. This article presents a survey of the management accounting methods employed by U. S. based Japanese manufacturers and documents evidence about the current direction of accounting practices that are being transferred from Japan to the U.S. work environment. The results of the study show that most of the U. S. based Japanese firms are similar to Japanese domestic firms in their use of management accounting methods of target costing and value engineering variable costing, and strategic adaptation of traditional methods such as standard costing and budgeting. It is also evident that U.S.-based Japanese affiliates may be influenced by U.S. practices. as shown by significant usage of activity-based costing and internal rate of return for evaluating capital investment projects. This article is an important part of a continuing effort to study the development of management accounting among foreign-owned subsidiaries in tile U.S., helping them to meet the challenges of global competition. Additionally, expanding this line of research on foreign subsidiaries that apply world class management accounting practices in other countries may assist U.S. multinational firms in their overseas subsidiaries' operations. Two limitations of this study and, thus, suggestions for future research are identified. First, the data on U.S.-based Japanese affiliates were collected for one point in time. Second, this study, did not match each U.S.-based Japanese affiliate with its parent in Japan.

The Compatibility of Multicurrency Accounting with Functional Currency Accounting
by Orapin Duangploy and Guy W. Owings

Abstract: In today's high-tech and global economy. this study introduces multicurrency accounting as an effective tool to manage resources and compares its reporting capabilities with current generally accepted accounting principles. Further, it proposes a means to integrate multicurrency accounting into internal reporting and external reporting as supplemental disclosures. Multicurrency accounting has the merit of reflecting the true exposure position of each hard currency, in addition to the dollar-based consolidated financial statement. It lends itself readily to mark-to-market accounting; its application for external reporting is foreseeable in the near future.

German Managers' Attitudes Towards Anglo-American Accounting: Results from an Empirical Study on Global Accounting Harmonization
by Martin Glaum and Udo Mandler

Abstract: The starting-point of the present paper are systematic differences between the answers of German corporate managers and professors in an empirical study by C&L Deutsche Revision AG (1995) on accounting harmonization. In this study, managers expressed themselves in all questions more positively towards current German accounting and more negatively towards US accounting than professors. The fundamental assumption put forward in this paper is that these differences are due to differences in the economic interests of the two groups. To test this empirically, hypotheses are deduced with regard to the accounting-related interests of the executive managers. The idea behind the hypotheses is that managers' answers to questions in the C&L Industry Study can be explained by structural features of their respective companies. The hypotheses are tested using multiple regression analysis. The results of the tests show that managers answers can, to some extent, be explained by the suggested multiple regression approach. However, the answers to the rather general and abstract question (the preferred balance between the true-and-fair- view and prudence accounting principles) are much better explained than the answers with regard to detailed US-GAAP regulations. We must assume that the managers' attitudes towards concrete US-GAAP, which are directly related to corporate accounting practice are influenced by a multitude of firm-specific and personal factors.

Geographic Segment Disclosures: Theories, Findings, and Implications
by Don Herrmann and Wayne B. Thomas

Abstract: This article discusses both the relevant theories and the research findings on , geographic segment disclosures under SFAS 14 and relates implications of these findings to tile FASB/AcSB 's exposure draft. Research studies on geographic segment disclosures are divided into three broad categories: predictive ability, security pricing, and risk assessment. For each category, we provide a theoretical analysis of the importance of geographic segment information and the related empirical findings. Finally, we relate potential implications for the usefulness of geographic segment disclosures to the FASB/AcSB's exposure draft, discussing both weaknesses and improvements.

An Investigation of the Ethical Decision-Making Process Across Varying Cultures
by Maria L Roxas and Jane Y. Stoneback

Abstract: This study examines the influence of dimensions of culture on the ethical decision process. Do various cultures perceive the ethical dilemma differently? Do these cultures prefer different types of actions? Do these cultures perceive the role of the accountant differently in response to the consequences? This study has a broad scope of countries (nine), which allows richer contrasts of cultural dimensions. The three aspects of the ethical decision-making process (perceived dilemma, perceived actions, and perceived consequences) are analyzed rather than asking the respondent to make an ethical judgment. Accounting systems adopted by countries reflect culture, profession, and industry. The response from countries with different accounting systems analyzed. The findings of this study will provide practitioners as well as academics insight into the harmonization of accounting standards. Research about ethical problems may help accountants anticipate and predict problems that might occur and identify referent countries for solutions to these problems. These findings will also be useful to auditors and accountants designing training programs for multicountry practices.


The IASC-U.S. Comparison Project: A Report on the Similarities and Differences between IASC Standards and U.S. GAAP based on a Study Undertaken by the FASB Staff
Edited by Carrie Bloomer
Reviewed by Elizabeth A. Murphy



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Last updated 08/06/03