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The effect of Diverse Accounting Practices of Financial Instruments under IFRS on De Facto Harmonization and Comparability: an Empirical Study of IAS 39 in Sweden
University of Gävle, Department of Business Administration and Economics.
2009 (English)Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

Objective: The IFRSs are getting more popularity all over the world. IAS 39 is one of the most sophisticated standards included in the IFRS jurisdiction, which mainly addresses the recognition and measurement of financial instruments and hedge accounting. When these instruments had been off-balance sheet hidden, accounting scandals were the consequences. Capturing these risky instruments in the body of the financial statements, according to IAS 39, implies diverse accounting choices where the selection is tied to managers' judgment.

The Swedish GAAPs have been criticized in the literature of being less conservative than the US GAAPs. Sweden as an EU member has mandated the adoption of IFRSs in the consolidated financial statements of all listed companies, since 2005. No published research has studied the effect of IAS 39 diverse accounting practices on de facto harmonization and comparability in Sweden. The current study fills this gap in the literature, and goes beyond to investigate whether the selected accounting choices are associated with the industry sectors.

Methods: A sample of 50 companies listed in NASDAQ, Stockholm in the financial and the industrial sectors is selected. Secondary data are obtained from the 2007 annual reports of the selected companies. Six accounting practice categories are detected under the standard. Herfindahl (H) index and Chi- square test are applied on the data.

Results: The results show a relatively low harmonization and comparability in most of the accounting practices, and variation in associations between accounting practices and sectors. This infers to the risk of producing non-comparable financial statements that may distort the value of accounting numbers, the content of financial statements and negatively affect market participants.

Conclusion: Much effort is still needed to enhance de facto harmonization and comparability of financial reporting. Further research is also motivated in order to develop a harmonization theory that support standard setters in revising the existing standard to eliminate inconsistencies in accounting choice selection and enhance comparability.

 

Place, publisher, year, edition, pages
2009. , p. 122
Keywords
Accounting practices, Accounting choices, IAS 39, de facto harmonization, comparability, IFRS
Identifiers
URN: urn:nbn:se:hig:diva-3674Archive number: E3BA: DiVA 008/09OAI: oai:DiVA.org:hig-3674DiVA, id: diva2:158521
Presentation
(English)
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samhälle/juridik
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Available from: 2009-02-09 Created: 2009-02-03 Last updated: 2009-02-09Bibliographically approved

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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • harvard-cite-them-right
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • sv-SE
  • en-GB
  • en-US
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  • nn-NB
  • de-DE
  • Other locale
More languages
Output format
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  • asciidoc
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