Accounting Differences: U.S. Enterprises and International Competition for Capital.

Abstract The lack of harmonization of international accounting standards is frequently addressed in the literature. Since the fundamental purpose of accounting and the nature of standard-setting and regulatory processes vary from country to country, alternative reporting standards and practices have been developed. Prior studies describe and compare the accounting concepts, reporting practices, and principles of countries around the world. These studies report major differences in a variety of items. Some participants in the financial community envision serious problems caused by these differences. This study reports information about perceptions of accounting educators, chief financial officers, practicing accountants, and managers of international portfolios regarding the impact of differences in accounting concepts, reporting practices, and principles on the ability of U.S. enterprises to compete with foreign enterprises. The findings of the study indicate that several items are perceived to have a positive impact and several items are perceived to have a negative impact on international competition. A one-way ANOVA comparison of the responses of the four groups found significant differences in the perceptions of the groups on eight items. A majority (67.4%) of the respondents indicated that changes are needed in the accounting concepts, reporting standards, and principles for U.S. enterprises. All four groups were consistent in their perception that the availability of capital was the most important factor affecting international competition. Differences in accounting concepts, reporting practices, and principles are perceived as being less important by accounting educators than by the other groups. Information about the perceptions of different user groups on the impact of the differences in accounting concepts, reporting practices, and principles on the ability of U.S. enterprises to compete internationally should be helpful to officials making decisions about international transactions and to policy-making organizations considering international harmonizations of accounting standards.