International Accounting Harmonization: Evidence from Europe

Abstract

The goal of this study is to describe and summarize how the harmonized international accounting system can promote business decisions and influence economic environment. The unified, harmonized accounting system will lead to new types of analysis and data, furthermore with the possible integration of new indicators from the business management of certain countries. Especially the multinational companies whose subsidiaries had to report for some purposes using national accounting rules convert and consolidate their different framework for unified financial statement where they are listed. A suitable international accounting system can help multinational enterprises accomplish their managerial functions on a global basis. Meanwhile the interpretation and adoption of the financial information based on the different accounting methods are also expensive for the users of these reports. Therefore an authentic and harmonized international accounting system could form that business language, which would allow the comparison of the accounting information of each country. The accounting system differences matter even to financial analysts who specialize in collecting, measuring and disseminating business information about the covered companies suggests that there are potential economic costs, associated with variation in national rules across countries. Besides, it is very important task for managers and researchers the valuation and analyzing the effects of harmonized accounting system on the business environment, especially their contribution to globalization. According to the business practice it is obvious that the usage of harmonized international accounting system leads to a reduction of the information asymmetry between the owners and the managers. Key words: accounting harmonization; globalization; classification; national rules differences; influencing factors; Europe