Financial Accounting and Equity Markets

Forum: Accounting Standards Philip Brown and Greg Clinch

GLOBAL HARMONISATION OF ACCOUNTING STANDARDS: WHAT RESEARCH INTO CAPITAL MARKETS TELLS US

The accompanying paper by Tarca illustrates a substantial degree of diversity in different countries’ accounting practices. This article takes a financial markets perspective to consider three fundamental questions relating to the reduction of this diversity through harmonisation of accounting standards:

• How well do world equity markets now cope with diversity in accounting information?
• How would harmonisation affect stock exchanges, and the Australian Stock Exchange (ASX) in particular?
• Would individual firms and their shareholders benefit from harmonisation?

In approaching these questions, we focus ...