Trends in research on international accounting harmonization · Trends in research on international accounting harmonization C. Richard Bakera,⁎, Elena M. Barbub,1 a School of Business,

The International Journal of Accounting
42 (2007) 272–304
Trends in research on internationalaccounting harmonization

C. Richard Baker a,⁎, Elena M. Barbu b,1

a School of Business, Adelphi University, Garden City, NY 11530, USAb Université d'Orléans, Rue de Blois — BP 6739, 45067 Orléans, France

Abstract

International harmonization of financial accounting standards has been the goal of manyprofessional and academic accountants during the last 40 years. As of January 1, 2005, internationalaccounting harmonization entered a new and perhaps decisive phase. From that date, all companiesdomiciled in the European Union with shares listed on securities exchanges are required to preparetheir consolidated accounts in accordance with International Financial Reporting Standards (IFRS).This landmark event presents an opportunity for accounting researchers to assess the status of researchon international accounting harmonization. In this paper, we review articles published in major Englishlanguage accounting journals during the period from 1965 through 2004 in order to trace thematic andmethodological trends in this line of research and to assess where the research may evolve from here.© 2007 University of Illinois. All rights reserved.

Keywords: Accounting research; International accounting harmonization; International accounting research;Financial accounting standards

1. Introduction

International harmonization of financial accounting standards has been the goal of manyprofessional and academic accountant for many years, but progress has been slow inachieving this goal. There have been impediments to the creation of a uniform set ofaccounting standards for financial reporting purposes on a worldwide basis, not the least of

⁎ Corresponding author. Tel.: +1 516 877 4628; fax: +1 516 877 4607.E-mail addresses: [email protected] (C.R. Baker), [email protected] (E.M. Barbu).

1 Tel.: +33 2 38 49 47 32; fax: +33 2 38 49 48 16.

0020-7063/$30.00 © 2007 University of Illinois. All rights reserved.doi:10.1016/j.intacc.2007.06.003

mailto:Baker3@Adelphi.�edu

mailto:[email protected]

http://dx.doi.org/10.1016/j.intacc.2007.06.003

273C.R. Baker, E.M. Barbu / The International Journal of Accounting 42 (2007) 272–304

which have been cultural, economic, and legal differences among countries. However, theprocess of international accounting harmonization has now entered a new phase. FromJanuary 1, 2005, all companies domiciled in the European Union with shares listed onsecurities exchanges must prepare their consolidated accounts in accordance withInternational Financial Reporting Standards (IFRS) issued by the International AccountingStandards Board (IASB). This event presents an opportunity for accounting researchers toanalyze trends in research on international accounting harmonization and to assess wherethis research may proceed from here.

In this review article we identify over 200 research articles published between 1965 and2004 that deal with international accounting harmonization. We also identify trends in thisline of research, some of which grew or were reduced in importance during the 40 yearperiod examined. In general the volume and level of rigor of the research increased, thusproviding evidence of the importance of this line of subject to the accounting researchcommunity. The remainder of this paper proceeds as follows. In Section 2 we situateinternational accounting harmonization research within the larger field of internationalaccounting research, and within the discipline of accounting generally, and we discuss thesignificance of this line of research. In Section 3, we present the methodology used toundertake this review. In Section 4 we identify and discuss trends in research on internationalaccounting harmonization, noting how these trends have grown or were modified during theperiod examined. Section 5 summarizes and concludes the paper.

2. Situating IAH research

The accounting discipline can be divided into a number of sub-disciplines, including:financial, managerial, auditing, tax, and governmental accounting. Each sub-disciplinefollows certain research methodologies and targets a relatively small number of journals asthe primary outlets for its efforts. In contrast, International Accounting Research (IAR) caninvolve any of the sub-disciplines of accounting, provided there is an internationalconnection (Prather-Kinsey & Rueschhoff, 2004). Wallace and Meek (2002) define IAR asbeing concerned with:

2 The

accounting phenomena in one country with lessons or repercussions extending toother countries…accounting phenomena related to multinational enterprises… globalmovements to shape the direction of accounting…and comparative accountingrequirements and practices.

While IAR has been recognized as a sub-discipline of accounting research for manyyears,2 Falk (1994) argued that most IAR lacked rigor and an adequate theoreticalunderpinning. In recent years, however, there has been an increase in the volume of IAR (seePrather-Kinsey & Rueschhoff, 2004), and there has also been an increase in the rigor andlevel of theory used in undertaking IAR (see for example, Meek & Thomas, 2004). As partof IAR, international accounting harmonization research has contributed to the increase involume and rigor of IAR.

International Section of the American Accounting Association was created in 1976.

Fig. 1. Situating IAH research within accounting research.

274 C.R. Baker, E.M. Barbu / The International Journal of Accounting 42 (2007) 272–304

While the subject matter of IAR might involve any of the sub-disciplines of accounting,this review article focuses on research dealing with the international harmonization offinancial accounting standards (hereafter IAH). IAH research investigates the arguments for,efforts made towards, and trends in the direction of achieving international harmonization offinancial accounting standards. IAH research is a subset of IAR, and it is also a subset offinancial accounting research within the overall discipline of accounting. See Fig. 1 for adiagram which graphically situates IAH research within the accounting discipline.

2.1. The importance of IAH research

As with many topics in accounting research, practicing accountants may develop aninterest in the topic prior to academic accountants. There was little interest in IAH researchon the part of the academic community prior to 1965. Most of the early articles dealing withIAH were written by practicing accountants, and they were published in professionaljournals, such as the Journal of Accountancy3 (see for example: Brandt, 1962; Englemann,1962; Enthoven, 1965; Jennings, 1962). For example, the objective of Brandt's (1962)article in the Journal of Accountancy was to examine “differences in accounting principlesand practices in European countries, with a suggested approach to worldwide uniformity”(p. 68). The goal of achieving worldwide uniformity of financial accounting standardscontinued to be important for practicing accountants throughout the intervening period(see for example: Cairns, 1989; Carey, 1990; Fisher, 1990; Linowes, 1969; Wilson, 1991;Van Hulle, 1989a,b; Wyatt & Yospe, 1993).

The creation of the International Accounting Standards Committee (IASC) in 1973,appears to have prompted an increased interest in IAH research. Wyatt (1989) noted that oneof the primary reasons for the creation of the IASC was to advance the internationalharmonization of financial accounting standards. In response, accounting researchers beganto investigate the feasibility of achieving international harmonization and also to investigatethe reasons behind the observed diversity of accounting practices. Between 1973 and 1989,progress was slow towards achieving the goal of international harmonization. In a move to

3 Published by the American Institute of CPAs.


speed up this process the IASC issued a Framework for the Preparation and Presentation ofFinancial Statements in 1989 which set forth the basic concepts underlying internationalaccounting standards (IAS). The purpose of this framework was to promote greaterinternational harmonization by reducing the number of alternative accounting treatmentspermitted. However, once again, progress was slow towards reaching the goal of inter-national harmonization. In 1995, an agreement was reached between the IASC and theInternational Organization of Securities Commissions (IOSCO) whereby IASC agreed todevelop a core set of accounting standards, and IOSCO in turn agreed to recommend thatthese standards be allowed for use in global capital markets (IASC, 1995). This agreementbetween the IASC and IOSCO signaled that one of the primary reasons for internationalharmonization was to facilitate the operations of worldwide capital markets. This recognitionled to an increased interest in IAH research on the part of American accounting researcherswho had been investigating relationships between accounting variables and share-pricereturns for a number of years. Other events which have also been significant in thedevelopment of IAH research include the creation of the International Accounting StandardsBoard (IASB) as the successor to the IASC in 2001, and the European Parliament's approvalin 2002 of the use of IAS/IFRS for listed companies in the EU. Fig. 2 provides a timeline ofthe important events in international harmonization which have had an impact on thedevelopment of IAH research.

The following section describes the methodology we used in this paper to investigatetrends in IAH research.

3. Methodology

To explain our methodology, we first discuss the selection of materials pertaining to IAH;second, the selection of academic journals; third, the identification of articles; fourth, theclassification of articles.

3.1. Selection of material pertaining to IAH

We initially attempted to identify all of the available literature pertaining to IAH,including: articles in academic journals; articles in non-academic journals; articles innewspapers; directives and other material issued by the European Commission; material

Fig. 2. Timeline of Important events in IAH.


from accounting firms; chapters in accounting textbooks, and so forth. The extent of thismateriel was formidable. By analyzing a sample of these documents, we concluded that themost important contributions to the literature have appeared in academic research journalswhich, therefore became the focus of our attention.

3.2. Selection of academic journals

In order to place a limit on the scope of the research, a decision was made to concentrateon English language accounting research journals. There were several reasons for thisdecision. First, we observed that non-English language journals are often intended for anational audience, and they do not publish a great deal of research on IAH. A second factorwas that IAH specialists from various countries often publish their work in English languagejournals. Consequently, we decided to restrict our search to the English language journalsshown in Appendix A. This list of journals includes all English language accounting journalswith the word “international” in their title, as well as a number of other journals that aregenerally considered to be of high quality (see Lowe & Locke, 2005; Prather-Kinsey &Rueschhoff, 2004, for examples of previous studies which have looked at journal quality inthe international arena).

3.3. Identification of articles

We reviewed all of the accounting research journals listed in Appendix A from the dateof their inception. The identification of IAH articles was based on a systematic analysis oftables of contents, abstracts and keywords, focusing on the words: “harmonization” and“international accounting standards”. (Fig. 3) If the title or the keywords did notspecifically include the keywords pertaining to our subject, but the abstract contained anidea that caused us to read the article, we read the article completely. Therefore, even if thetitle, keywords, or abstract did not mention IAH directly, we were able to identify articlespertaining to IAH. This process resulted in the identification of the articles listed inAppendix B. The first article identified was published in The Accounting Review in 1965

Fig. 3. Trend number of IAH articles.


(B: Kollaritsch, 1965).4 Consequently, our analysis begins in 1965 and extends through2004.

4. Trends in IAH research

We identified 202 IAH research articles dealing with IAH published in the 24 accountingresearch journals listed in Appendix A during the time period 1965 to 2004 (see Table 1).The range of articles published per year was from zero in years 1970, 1971, 1974 and 1977,to a high of 13 articles in 2003. There was an increasing trend in the number of articlespublished per year (see Fig. 2), with an average of 2.3 articles per year in the period 1965–1973; 2.9 articles per year in the period 1973–1989; and 8.9 articles per year in the period1990–2004. These time periods were chosen to indicate the relative change in IAH researchover the total period examined. The first period corresponds with the time before the creationof the IASC in 1973. The second period extends from the creation of the IASC to theissuance of the IASC Framework in 1989, and the third period extends from the creation ofthe IASC Framework through 2004 (Fig. 3). Because of the length of time that it takes fromthe inception of a research project to its eventual publication, this division into three timeperiods is meant to be indicative of the trends in IAH research rather than implying a causalfactor which explains the rate of growth.

4.1. Classification of articles by theme

In order to develop a method of classifying IAH research, previous articles whichclassified IAR, such as those of Meek and Saudagaran (B: 1990) and Zambon (B: 1996),were examined. Similar classification schemes by Van der Tas (B: 1992), Barniv andFetyko (B: 1997) and Rahman, Perera and Ganesh (B: 2002) were also examined. Inaddition, certain themes were identified by studying the articles directly. Through adetailed process of reading and analyzing the IAH articles appearing in Appendix B, wewere able to identify certain research themes. The initial themes were AccountingUniformity, Comparative Studies, and Reflections on the IAH Process. The followingsection discusses these themes.

4.2. IAH research during the Initial Period: 1965–1973

4.2.1. Accounting uniformityDuring the Initial Period, there was a strong interest in accounting uniformity

(B: Wilkinson, 1965; B: Morgan, 1967). Wilkinson (B: 1965: 11) defined accountinguniformity as when: “each company presents only one set of accounts for all investors, ofwhatever nationality”. This interest in accounting uniformity was evident not only in theacademic literature, but also in the practicing community. There were topics dealing withaccounting uniformity at international congresses on accounting (Jennings, 1962) and,significantly, a compilation of accounting practices in different countries was prepared by theCommittee on International Relations of the American Institute of CPAs (AICPA, 1965). This

4 The letter B before the reference indicates that the reference is found in Appendix B.

Table 1Number of IAH articles: 1965–2004

Period Number ofarticles in period

Average number ofarticles per year

Number usingempirical methods

Percent usingempirical methods (%)

1965–1973 21 2.3 3 141974–1989 46 2.8 14 301990–2004 135 8.9 67 50Total: 1965–2004 202 5.0 84 42


publication appears to have signalled the emergence of IAH research. According toWilkinson(B: 1965: 11), the AICPA publication was “in part a reply to the pleas for uniformity ofaccounting throughout the world that have been heard at almost every one of the morerecently held International Congresses on Accounting.” There was also a belief on the part ofboth practicing and academic accountants that international harmonization of financialaccounting standards would be achieved through a better understanding of differences inaccounting practices in different countries (B: Beazley, 1968; B: Alhashim and Garner, 1973).Unfortunately, this belief proved to be ill-founded. Other authors who dealt with the theme ofAccounting Uniformity included: Enthoven (B: 1973), Felt (B: 1968), Lowe (B: 1967), andSavoie (B: 1969). The research methodology pursued by most of these authors wasdescriptive and normative, relying on archival texts in support of the author's conclusions.

4.2.2. Comparative studiesEven though there was a general focus on achieving accounting uniformity, it became

clear that there was also a need to explain differences in financial accounting practices,particularly among advanced industrial nations (B: Kollaritsch, 1965; B: Davidson andKohlmeier, 1966; B: Hatfield, 1966). Several authors attributed these differences toenvironmental factors. Among the factors identified were differences in culture and economicsystems (B: Choi, 1973a,b; B: Mueller, 1968; B: Clapp, 1967; B: Davidson & Kohlmeier,1966; B: Tyra, 1969). These authors also primarily used descriptive methodologies.

4.2.3. Reflections on the IAH processThere were also a number of articles which reflect on the impediments to achieving

international harmonization during this Initial Period of IAH research (B: Hauworth, 1973;B: Mueller, 1965, 1967, 1970; Seidler, 1967). Among the impediments identified was thelinkage between financial accounting standards and tax laws in many countries. Thesereflections often included recommendations pertaining to the creation of one set of inter-nationally recognized accounting principles as a necessary pre-requisite to achievinginternational harmonization. See Table 2 for a summary of the IAH research published in theInitial Period.

4.2.4. Research methodologies used during the Initial PeriodFor the most part, the research methodologies used during the Initial Period were

descriptive in nature, relying on subjective analyses of archival textual materials as supportfor recommendations and conclusions. Of the 21 articles identified during the Initial Period,only three articles (14%) used empirical methodologies where the researcher collected data

Table 2Themes in IAH research during the Initial Period: 1965–1973

Theme Articles (see Appendix B) Number of papers

Accounting uniformity Alhashim and Garner (1973), Beazley (1968),Enthoven (1973), Felt (1968), Lowe (1967),Morgan (1967), Savoie (1969), Wilkinson (1965)

Descriptive: 8Empirical: 0Sub-total: 8

Comparative studies Choi (1973a,b), Clapp (1967),Davidson and Kohlmeier (1966), Hatfield (1966),Kollaritsch (1965), Mueller (1968), Tyra (1969)


Reflections on the IAH process Hauworth (1973), Mueller (1965, 1967, 1970),Seidler (1967)


Totals Descriptive: 18Empirical: 3Total: 21


and tested hypotheses using statistical methods. These three articles were authored byDavidson and Kohlmeier (B: 1966) and Choi (B: 1973a) in the Journal of AccountingResearch; and Choi (B: 1973b) in The International Journal of Accounting. These threearticles provide some evidence regarding the emerging influence of the Journal ofAccounting Research within empirical accounting research and the influence of The Journalof International Accounting in international accounting research generally (see Table 2).

4.3. IAH research during the Intermediate Period: 1974–1989

After the creation of the IASC in 1973, several new themes emerged in IAH research.These new themes included: a focus on the creation of a Conceptual Framework forinternational accounting standards-setting as a means of fostering greater internationalharmonization; investigations of Factors of the Environment as a way to explain differencesin accounting practices; discussions about the IASC as a way of enhancing the IAH process;and studies of the harmonizing effects of the Accounting Directives issued by the EuropeanUnion. Some of these themes, such as the Conceptual Framework, reflected similardevelopments in standards-setting in the United States under the newly created FASB. InEurope, there was a growing interest in studying the effects of the Accounting Directivesissued by the European Commission.

4.3.1. Continuing theme: Accounting uniformityThe continuing theme of Accounting Uniformity focused on the achievement of greater

levels of international harmonization, with the eventual goal of achieving uniformity inaccounting practices. Among the authors who addressed this theme were: Bromwich(B: 1980), Fitzgerald (B: 1981), Nair and Frank (B: 1981). Dopunik (B: 1987), Van der Tas(B: 1988). From the standpoint of methodology, Bromwich (B:1980) used an analyticalmodeling technique to examine international accounting harmonization. Van der Tas(B: 1988) introduced the use of the Herfindahl index to measure the extent of accountinghomogeneity in different countries. However, in the other papers, the research method-ologies were primarily descriptive and normative.


4.3.2. New theme: Conceptual frameworkThe idea of creating a conceptual framework to facilitate accounting harmonization was

present in both the practicing and academic accounting literature in the United States for manyyears, extending to at least the work of Patton and Littleton (1940). The American conceptualframeworkwas established by the Financial Accounting Standards Board (FASB) over a seven-year period between 1978 and 1985. With regard to international harmonization, Peasnell(1982) argued for the creation of a conceptual framework for financial accounting in the UnitedKingdom, and he felt that this should be extended to the international accounting standards-setting arena as well. Later, DePree (B: 1989) analyzed the structure of the FASB's conceptualframework and discussed its potential applicability to international accounting standards-setting.Other authors who investigated conceptual framework as a basis for achieving internationalharmonization included: Previts (B: 1975), Frank (B: 1979), Baxter (B: 1981), Nobes (B: 1981),Choi and Bavishi (B: 1982), Violet (B: 1983), Aitken and Islam (B: 1984), Taylor (B: 1987).Most of these authors used descriptive and normative techniques in pursuing their researchrather than collecting empirical data and testing hypotheses. An exceptionwasDePree (B:1989)who used an analytical modeling technique to investigate the conceptual framework.

4.3.3. Continuing theme: Comparative studiesA number of IAH research articles were published during the Intermediate Period which

compared accounting practices in different countries. Similar to the Initial Period, it wasbelieved that accounting uniformity would emerge through a better understanding ofdifferences. For example, Barrett (B: 1976) measured the degree of financial accountingdisclosure by 103 companies in seven countries: Germany, the United States, France, Japan,the Netherlands, the United Kingdom and Sweden. He analyzed annual reports from 1963 to1972 and concluded that the financial disclosure of English and American companies wasmore complete than in the five other countries. Comparisons between IAS and US GAAPalso became common during this period. For example, Rivera (B: 1989) compared IASs andtheir American equivalents. For Fitzgerald (B: 1981), Choi and Bavishi (B: 1982) andMcComb (B: 1979), the reduction of the differences was considered to be essential to the IAHprocess. Using the C index of conservatism, Gray (B: 1980) estimated the impact ofdifferences in accounting standards on various measures of company performance. Theidentification of differences in financial performance alerted researchers to the possibility ofstudying relationships between capital market variables and accounting practices in theinternational setting. Other researchers who pursed this theme included: Burnett (B: 1975),Benston (B: 1976), Briston (B: 1978), DaCosta, Bourgeois and Lawson (B: 1978), Evans andTaylor (B: 1982), Nobes (B: 1983), Goodrich (B: 1986), Chow and Wong-Boren (B: 1987),Puxty, Willmott, Cooper and Lowe (B: 1987), Wallace (B: 1988), Biddle and Saudagaran (B:1989), Cooke (B: 1989), and Rees and Sutcliffe (B: 1989). Many of these researchers usedmore rigorous research methodologies than previously, which involve the collection of dataand the testing of hypotheses. Examples of these more rigorous studies included: Barrett (B:1976), Choi and Bavishi (B: 1982), Gray (B: 1980), and Nobes (B: 1983).

4.3.4. New theme: Factors of the environmentDuring this period, two primary factors in the environment were hypothesized to explain

differences in accounting practices in different countries: the cultural factor and the


economic factor. The impact of culture was the subject of research by various authors whoused the cultural frameworks of Hofstede (1980) and Gray (B: 1988) to analyze differencesbetween countries. Cultural variables also interested Violet (B: 1983) who attributed therelative lack of success of the IASC to cultural factors. Belkaoui (B: 1983) viewed languageas a variable and studied the impact of language on accounting practices. Jaggi (B: 1975),Radebaugh (B: 1975), Ndubizu (B: 1984), Schweikart (B: 1985), Talga and Ndubizu(B: 1986), and Nair and Frank (B: 1980) also analyzed the impact of culture on accountingpractices in various ways, including both empirical and descriptive methods.

The impact of economic factors on accounting differences was investigated by severalauthors. Gray (B: 1988) and Perera (B: 1989) concluded that international harmonization ofaccounting practices depended not only on the level of regulation within an economy, but alsoon macro-economic factors. Chow and Wong-Boren (B: 1987) analyzed micro-economicfactors that impacted on accounting choices and the financial reporting practices of companies.Some researchers went further by proposing a classification scheme for countries according toeconomic factors in the environment. For example,DaCosta et al. (B: 1980) analyzed a numberof economic factors influencing the accounting practices of various countries. They developeda classification scheme to differentiate countries according to these economic factors. From amethodological perspective most of the research within this theme was descriptive, however,there was a notable increase in the use of empirical methods, including the papers by Belkaoui(B:1983), Nair and Frank (B:1980), and Chow and Wong-Boren (B:1987).

4.3.5. New theme: The IASCThere were two primary sub-themes within this new theme addressing the IASC. The first

sub-theme focused on histories of the IASC, and the second sub-theme dealt with InternationalAccounting Standards (IAS).5 Shortly after the creation of the IASC, histories of the IASCbegan to appear. For example, Lord Benson, who was instrumental in creating the IASC,produced two histories of its founding (Lord Benson, 1976, 1989). Cummings (B: 1975) alsodiscussed the background and origins of the IASC. Baxter (B: 1981) offered an analysis of thehistory, advantages and disadvantages of IASs. He also explained the international standard-setting process and he expressed concerns about the slowness of the process. Other researchfollowing this theme included: McKinnon and Janell (B:1984) and Wyatt (B:1989). From amethodological standpoint all of the research in this area was descriptive and normative.

4.3.6. New theme: Accounting directivesOne of the primary reasons for the founding of the EuropeanEconomicCommunity6 (EEC)

was to create a free market for goods and services throughout Europe. The EEC also wanted toestablish a uniform set of commercial laws to facilitate the creation of a commonmarket. Thisled to the issuance of Accounting Directives which were intended to produce a uniform set ofaccounting standards among themember states of the EuropeanUnion. Initially there was littleinterest on the part of accounting researchers in studying the Accounting Directives. This mayhave been because British and American researchers in the 1970s and 1980s did not believethat harmonization of accounting standards in the European Union was achievable, and

5 Now International Financial Reporting Standards (IFRS).6 Today the European Union.


therefore they did not focus on this subject. Nevertheless, this theme eventually came to be ofgreat interest to accounting researchers. For example, the 4th Accounting Directive issued in1978 dealt with valuation rules, financial reporting standards, and annual reporting obligations.The origins of this Directive, dating from 1971, lay in German corporate law. Valuation ruleswere conservative and financial reporting standards were detailed. The entrance of Denmark,Ireland and theUnitedKingdom into the EuropeanCommunity led to amodification of the 4thDirective in 1974 in the direction of greater flexibility. The 4th Directive also introduced theconcept of the “true and fair view” into European accounting standards-setting (B: Nobes,1993). Burnett (B: 1975) surveyed the extent of harmonization achieved through theDirectives, especially the 4th Directive. Also, Turley (B: 1983) discussed the impact of the 4thDirective on European corporate law. From a methodological perspective, all of the articles inthis theme used descriptive and normative methods.

4.3.7. Summary of the research themes and research methodologies used during theIntermediate Period

In comparison with the Initial Period (1965–1973), the Intermediate Period (1973–1989)was characterized by an increase in the volume of research (46 articles versus 21 in the InitialPeriod). There were also more research themes. In addition to the recurring themes ofAccounting Uniformity and Comparative Studies there were several new themes, including:the Conceptual Framework; Factors of the Environment; the IASC; and studies of theEuropean Accounting Directives. These new themes reflected the growing interest inempirical research on the part of American accounting researchers. Of the 46 articlespublished during the Intermediate Period, 14 (30%) were empirical studies versus 14% in theInitial Period. However, there were still 32 (70%) articles which used primarily descriptiveor normative approaches to IAH research. The principal journal for the publication of IAHresearch during the Intermediate Period was The International Journal of Accounting, whichpublished 22 (49%) of the 46 papers. The two most important outlets for empirical researchwere the Journal of Accounting Research (5 articles) and The Accounting Review (5 articles).No other journal published more than two articles focusing on IAH research during theIntermediate Period. See Table 3 for a summary of the research articles in this period bytheme.

The following section will discuss the Mature Period of IAH research (1990–2004).

4.4. IAH research during the Mature Period: 1990–2004

At the end of the Intermediate Period (1974–1989) there was still a lack of harmonizationof accounting practices on an international basis. This prompted IAH researchers toinvestigate more thoroughly the factors that caused differences in accounting practices andto conduct their research in a more rigorous manner. Some authors developed ways toclassify countries empirically according to their accounting practices. Others investigatedcorrelations between environmental factors, such as economic and cultural variables, anddifferent practices. A new theme emerged during the Mature Period which involved theinvestigation of relationships between differences in accounting practices and share-pricereturns in international capital markets. Another new theme measured the extent of IAHusing various economic and statistical indices.

Table 3Themes in IAH research during the Intermediate Period: 1974–1989

Continuing themes New themes Articles (see Appendix B) Number ofarticles

Accountinguniformity

Conceptualframework

Bromwich (1980), Nair and Frank (1981),Dopunik (1987), Van der Tas (1988).


Previts (1975), Frank (1979), Nobes (1981),Aitken and Islam (1984), Taylor (1987),De Pree (1989).


Comparativestudies

Barrett (1976), Benston (1976), Briston (1978),DaCosta,, Bourgeois and Lawson (1978),McComb (1979), Gray (1980), Fitzgerald (1981),Choi and Bavishi (1982), Evans and Taylor (1982),Nobes (1983), Goodrich (1986), Puxty, Willmott,Cooper and Lowe (1987), Wallace (1988),Biddle and Saudagaran (1989), Cooke (1989),Rivera (1989), Rees and Sutcliffe (1989).

Descriptive: 11Empirical: 6Sub-Total: 17

Factors of theenvironment

Jaggi (1975), Radebaugh (1975), DaCosta,Bourgeois and Lawson (1980),Nair and Frank (1980),Violet (1983),Belkaoui (1983), Ndubizu (1984),Schweikart (1985), Chow and Wong-Boren (1987),Talaga and Ndubizu (1986), Gray (1988),Perera (1989).


Reflections on theIAH process

The IASC Cummings (1975), Baxter (1981),McKinnon and Janell (1984), Wyatt (1989)


Accountingdirectives

Burnett (1975), McComb (1982),Turley (1983)


Totals Descriptive: 32Empirical: 14Total: 46


4.4.1. Continuing theme: Accounting uniformityUsing an interview approach involving Sir Bryan Carsberg, the General Secretary of the

IASC, Schweikart, Gray, and Salter (B:1996) presented normative arguments in favor ofaccounting uniformity, which included: the increasingly globalized nature of businessactivities; the needs of the common market within the European Union; the increasinglyglobalized nature of capital markets; the privatization of many formerly public enterprises;and the need to reduce the costs of financial reporting. The importance of a conceptualframework in achieving accounting uniformity was investigated by Brown and Tarca(B: 2001), who compared the conceptual frameworks of the American, British, Internationaland European standards-setting bodies. The normative arguments for greater accountinguniformity also led to strategies to increase international harmonization. Goeltz (B: 1991)considered international harmonization to be virtually impossible to achieve, but otherauthors focused on the importance of preserving the process towards increasedharmonization and achieving eventual uniformity. Wallace (B: 1990) analyzed the external

Table 4Themes in IAH research during the Mature Period: 1990–2004

Continuingthemes

Newthemes

Articles(see Appendix B)

Number ofpapers

Accountinguniformity

Wallace (1990), Goeltz (1991), Purvis et al. (1991),Chandler (1992), Wolk and Heaston (1992),Van Hulle (1993), Most (1994), Ijiri (1995),Kenny and Larson (1995), Adams et al. (1993),Cairns (1997), McGregor (1999), Brownand Tarca (2001), Booth (2003), Deanand Clarke (2003), Jones and Wolnizer (2003),Standish (2003), Barker (2004)


Comparativestudies

Bhoocha and Stansell (1990), Meek andSaudagaran (1990), Nobes (1990),Biddle and Saudagaran (1991), Choi and Levich (1991),Cooke (1993), Grove and Bazley (1993),Frost and Pownell (1994), Yang and Lee (1994),Boross et al. (1995), Roberts et al. (1996),Schweikart et al. (1996), Zambon (1996),Adhikari and Emeyonu (1997), Barniv andFetyko (1997), Sutton (1997), Nobes (1998),Street and Shaughnessy (1998), Street andGray (1999), Ding et al. (2003),Maines et al. (2003, 2004), Tarca (2004)


Impact onshare pricesand returns

Meek (1991), Amir et al. (1993),Pope and Rees (1992), Bandyopadhyay et al (1994),Harris et al. (1994), Barth and Clinch (1996),Rees and Elgers (1997), Harris and Mueller (1999),Adam, Weetman and Gray (1993),Alford et al. (1993), Hellman (1993),Rahman et al. (1994), Saudagaran and Meek (1997),Weetman et al. (1998), Aboody et al. (1999),Pownall and Schipper (1999), Guentherand Young (2000), Hung (2000), Schipper (2000),Asbaugh and Pincus (2001), Asbaughand Olsson (2002), Dumontierand Raffournier (2002), Bhattacharya et al. (2003),Leuz (2003), Bradshaw et al. (2004)


Factors of theenvironment

Cooke and Wallace (1990), Perera and Mathews (1990),Tay and Parker (1990), Weetman and Gray (1990),Riahi-Balkaoui and Picur (1991), Wallace andGernon (1991), Ndbuizu (1992), Ahadiat andStewart (1992), Fechner and Kilgore (1994),Perera (1994), Baydoun and Willett (1995),Hoarau (1995), Nobes (1995), Van der Tas (1995),Hussein (1996), Taylor-Zarzeski (1996), Doupnik andSalter (1995), Craig and Diga (1996),Luther (1996), Sudagaran and Diga (1997),Flower (1997), Salter (1998), Williams (1999),Ali and Hwang (2000), Parker and Morris (2001),HassabElnaby et al. (2003), Hope (2003a,b),Evans (2004), Meek and Thomas (2004)



Table 4 (continued )

Continuingthemes

Newthemes

Articles(see Appendix B)

Number ofpapers

Accountingdirectives

Walton (1992), Emenyonu and Gray (1992),Nobes (1993), Zeff (1993), Hopwood (1994),Theunisse (1994), Herrman and Thomas (1995),Diggle and Nobes (1994), Thorell andWhittington (1994), Evans and Nobes (1998),Combarros (2000), Haller (2002)


Measures ofthe extent ofharmonization

Tay and Parker (1992), Van der Tas (1992a,b),Archer et al. (1995, 1996), Dopunik and Salter (1995),Lainez et al. (1996, 1999), Krisement (1997),El-Gazzar et al. (1999), Cañibano and Mora (2000),Morris and Parker (1999), Aisbitt (2001),Garrido et al. (2002), Land and Lang (2002),Taplin (2003, 2004)

Descriptive: 1Empirical : 16Sub-total: 17

Implementationof IAS/IFRS

Cooke (1991), Raty (1992), Guentherand Hussein (1995), Glaum (2000),Street and Bryant (2000), Kikuya (2001),Chen el al. (2002), Abd-Elsalamand Weetman (2003), Larsonand Street (2004), Xiao et al. (2004)


Total Descriptive: 68Empirical: 67Total: 135


environment of the IASC in order to propose a survival strategy for that body. Chandler(B: 1992) argued for the acceptance of IASs, while Van Hulle (B: 1993) suggested fourpossible ways for the EU to proceed with respect to international harmonization: (1) stopharmonization efforts in the EU; (2) allow the IASC to determine the extent of accountingharmonization within the EU; (3) allow the Americans to dominate the IAH process; (4) callon the EU to become a more active player in the process. In retrospect, we can see that thesecond option was the one that was pursued. From a methodological standpoint, the articlesin this theme continued to be primarily descriptive and normative; only one of the 18 articlesused an empirical research methodology (see Table 4).

4.4.2. Continuing theme: Comparative studiesIn the Mature Period, a number of researchers compared IAS/IFRS with U.S. GAAP. For

example, Grove and Bazley (B: 1993) compared 20 IASs with their American equivalents.They also recommended certain accounting treatments which they believed would improvethe efficiency of global capital markets. In addition, they estimated the costs and benefits oftheir recommendations. Street and Shaughnessy's (B: 1998) research described the evolutionof accounting standards during the period 1973–1997; they discussed similarities anddifferences in financial reporting practices of the IASC and the national accounting standards-setting bodies of the United States, England, Canada and Australia. Nobes (B: 1990)examined the effects of IASs on financial reporting of American companies listed in the U.S.capital markets. Because US GAAP is more detailed than IASs; “for a US company that isobeying GAAP, it is very difficult not to comply with IASC standards” (p. 42). Nobes also


compared U.S. GAAP and IASs and concluded that that the differences between IASs and U.S. GAAP have little impact on the financial reporting practices of American listed companies.Research in this area also indicated a growing convergence between international standardsandAmerican standards. Of the 23 articles included in this theme, eight (35%)were empiricaland 15 (65%) continued to be descriptive or normative (see Table 4).

4.4.3. Continuing theme: Factors of the environmentBefore 1990, two factors were identified as being the primary explanatory factors for

differences in accounting practices: the cultural and economic. After 1989, other factorsbegan to be considered and researchers argued that the diversity of accounting practices wascaused by factors beyond the cultural and economic, including: the historical development ofa nation's economy and its capital markets; differences in legal systems; differences in thenature of property rights; the size and complexity of companies within a country; the socialclimate; the degree of currency stability; the existence of accounting laws; and theeducational system. The studies in this theme can be divided into two categories: studiesemphasizing a single factor; and studies emphasizing a multitude of factors.

4.4.3.1. Studies emphasizing a single factor. The cultural factor has been one of the moststudied variables to explain differences in accounting practices. Many authors have usedHofstede's (1980) or Gray's (B: 1988) cultural frameworks. For example, Tay and Parker(B: 1990), Baydoun and Willett (B: 1995) and Hussein (B: 1996) analyzed the accountingpractices of industrialized countries based on cultural factors using the Hofstede framework.Riahi-Belkaoui and Picur (B: 1991) also found that cultural factors explained differences inaccounting practices. These differences were also observed by Taylor-Zarzeski (B: 1996),who emphasized the importance of cultural variables for differences in financial reporting. Inaddition, he pointed out that multinational companies tend to present more information thannational companies.

4.4.3.2. Studies emphasizing a multitude of factors. While various authors (B: Weetmanand Gray, 1990; B: Nobes, 1990) privileged the idea of economic factors as the primaryexplanatory reason for differences in accounting practices, Wallace and Gernon (B: 1991)criticized these conclusions, arguing that there is no precise way to explain the reasons fordifferences in accounting practices among countries. The studies of Cooke and Wallace(B: 1990), Doupnik and Salter (B: 1995), Saudagaran and Diga (B: 1997), Salter (B: 1998),Craig and Diga (B: 1996), and Williams (B: 1999) also contributed to the analysis ofmultiple factors as having an influence on differences in accounting practices.

4.4.3.3. Studies emphasizing political factors. Luther (B: 1996) maintained that politicalfactors were the primary reason for differences in accounting practices among countries. Hispremise was that conflicts exist between shareholders and other parties regarding theprovision of accounting information. Political influences on accounting standards-setting istherefore inevitable. Consequently, accounting standards-setting can be seen as a politicalprocess where the point of view of the most powerful often prevails. Research in this areasuggests that there has been domination of the IAH process by the major English speakingcountries. For example, Chandler (B: 1992) examined the connections between IASC and


IOSCO from a political perspective. Ahadiat and Stewart (B: 1992) looked at therelationships between the SEC, the European Union and the IASC. Most of these studiesemphasized the influence of American institutions such as the SEC and the FASB oninternational accounting standards-setting. Along this line, Hoarau (B: 1995) argued thatinternational accounting harmonization is a pretence to achieve a consensus around theAnglo-American accounting model. In a similar vein, Flower (B: 1997) asserted that “formore than 20 years of the IASC existence, the attitude of the Americans was rather that ofpatronage.” From a methodological standpoint.

4.4.4. Continuing theme: Accounting directivesThree Accounting Directives were issued during the Intermediate Period of IAH research

(1974–1989), but research pertaining to this theme began only to be significant about tenyears later. The gap between the issuance of the Accounting Directives and researchers'interest in studying the Directives suggests that researchers were waiting to see the reactionto the Directives within the European countries. With respect to the 4th Directive, Walton(B: 1992) sought to answer the question of whether the extent of accounting harmonizationrequired by the 4th Directive allowed comparability of accounting information amongEuropean countries. Emenyonu and Gray (B: 1992) studied the extent of accountingharmonization in Germany, France and the United Kingdom. They use two indexes (chi-square and I) to analyze the annual reports of 26 companies in these three countries. Theirconclusion was that there were significant differences between financial reports issued bycompanies in these countries, thus, indicating a lack of harmonization. This lack ofharmonization was also observed by Theunisse (B: 1994) who found differences in financialreporting practices and discussed the consequences of these differences for financialstatement analysis in three different countries (France, Belgium and Germany). Sheattributed the lack of harmonization to the options available under the 4th Directive, as wellas the adaptation of accounting practices to national legislation and the socio-economicenvironment of each country. Herrmann and Thomas (B: 1995) studied the impact of the 4thDirective by adding Belgium, Denmark, Ireland, the Netherlands and Portugal to Emenyonuand Gray's (B: 1992) sample. They argued that countries should be divided into twocategories: those with a legal influence (Germany, Belgium, France and Portugal) and thosewith an economic influence (Denmark, Ireland, the Netherlands and the United Kingdom).The second category was considered to have a greater degree of harmonization than the firstcategory. Nobes (B: 1993) also examined the introduction of the true and fair view by the 4thDirective and the effects of this requirement on accounting law and practice in the EuropeanUnion. Finally, Zeff (B: 1993) analyzed the connotations implied by the true and fair view.With respect to the 7th Accounting Directive, Diggle and Nobes (B: 1994) analyzed theoptions available under that Directive in order to determine if consolidated accounts lead toharmonization. With respect to the 8th Accounting Directive, Evans and Nobes (B: 1998)focused on the development of rules contained in that Directive and examined theimplementation of the Directive in England and Germany. There was also research that dealtwith several Directives simultaneously. Thorell and Whittington (B: 1994) discussed thedevelopment of harmonization under the 4th and 7th Directives as well as under IASs. Haller(B: 2002) discussed the development of accounting standards in the European Union fromthe date of the issuance of the 4th Directive through 2002. Also, Combarros (B: 2000)


analyzed the evolution of financial presentation practices in the European Union. From amethodological perspective, research on this theme was about evenly split betweenempirical research (five studies out of 12) and descriptive/normative research (seven studiesout of 12)(see Table 4).

4.4.5. New theme: Impact of harmonized accounting practices on share prices and returnsAs capital markets have become increasingly globalized there has been a perceived need

for more relevant and reliable accounting information in the international arena. As a result,securities exchanges have begun to require multi-national companies to prepare theirfinancial statements in accordance with a recognized set of accounting standards. Forexample, companies using IAS/IFRS who want to raise capital in American capital marketshave been required to reconcile their financial statements to U.S. GAAP using SEC Form20-F. This requirement provided the background for Amir et al. (B: 1993), Pope and Rees(B: 1993), Bandyopadhyay et al. (B: 1994), Barth and Clinch (B: 1996) and Rees and Elgers(B: 1997), and others to study the effects of using foreign GAAP on raising capital in theUnited States. For example, Amir et al. (B: 1993) studied the value relevance of accountingnumbers measured in accordance with U.S. and non-U.S. GAAP that were summarizedin reconciliations of earnings and shareholders' equity as required by SEC Form 20-F.The research question was, do the reconciliations of accounting data from foreign GAAP toU.S. GAAP increase the associations between accounting numbers and share prices orreturns? The results indicate that the reconciliations of earnings and shareholders' equity arevalue-relevant. This finding is important for public policy making and the setting ofinternational accounting standards because it indicates the value of the reconciliations. Inanother study, Pope and Rees (B:1993) investigated the information content of twoalternative accounting earnings measures constructed under U.K. and U.S. GAAP. Theiranalysis was based on data in the SEC 20-F filings by UK domiciled companies havingADRs listed in the United States. The research design involved testing the associationbetween U.K. stock returns and alternative accounting numbers. The evidence indicatedthat U.K. GAAP earnings changes have incremental information content after controlling forU.S. GAAP earnings changes, but that earnings levels measured under U.S. GAAP also haveindependent incremental information content after controlling for U.K. GAAP earnings. Theempirical results were consistent with prior research indicating that GAAP earningsadjustments add to the ability of earnings to explain share-price returns. From a method-ological standpoint, research in this area is empirical involving data collection and testing ofhypotheses, typically using theories based on variations of the capital asset pricing model. Ofthe 25 articles on this theme, 22 (88%) were empirical (see Table 4).

Other studies on this theme focused on the acceptance of IASs in international capitalmarkets. For example: Schipper (B: 2000) argued in favor of IASs, but Harris and Mueller(1999) considered that the Form 20-F reconciliation requirement was insufficient todetermine the degree of compatibility of IAS with U.S. GAAP. As IAH became moreprominent as an area of research, there was a general extension of capital markets researchinto the international arena. One of primary questions studied by this line of research waswhether the capital markets could be fooled by the presentation of different accountingnumbers because of the application of different accounting methods in different countries.The use of different accounting methods may impact various accounting numbers (e.g.,


earnings, return on assets, return on equity, book value, price–earnings multiple, etc). Usingthe conservatism index of Gray (B: 1980), Adam,Weetman and Gray (B: 1993) analyzed theeffects of using IAS on earnings and shareholders' returns. Weetman and Gray (B: 1990) andHellman (B: 1993) demonstrated that variations in the degree of accounting harmonizationin different countries can explain differences in the accounting numbers reported bycompanies (e.g., earnings). Weetman et al. (B: 1998) also investigated differences in themeasurement of profits by comparing English, American and international standards. Thesame kind of diversity was observed by Aisbitt (B: 2001), for whom the harmonization ofaccounting standards argued in favor of the harmonization of tax systems. Alford et al.(B: 1993) also conducted studies of the relationships between accounting methods indifferent countries and share prices.

4.4.6. New theme: Measures of the extent of international harmonizationThe general objective of the research conducted on this theme7 has been the measurement

of the extent of international harmonization of accounting practices. This theme can also beclassified according to the statistical method used to measure the degree of harmonization.Two types of measures were used: indices and statistical methods.

4.4.6.1. Indices. The H index (Herfindahl index) has been used to estimate the degree ofharmonization at the national level, and the I index (a variation of the H index) has been usedto measure the degree of harmonization at the international level. These indices wereoriginally proposed by Van der Tas (B: 1988). Because the I index has certain limits,Herrmann and Thomas (B: 1995) proposed an alternative— the adjusted I index. However,because these indices do not allow for complete comparability of financial reportingpractices, Van der Tas (B: 1988) also created the C index which measures the extent ofinternational harmonization. Van der Tas expanded the C index to take into account thesituation where information published in the footnotes allows reprocessing of data that laterappear in the accounts. Archer et al. (B: 1995) divided the C index into two sub-indexes:intra-national and international. The C index has been considered to be the most reliable wayof measuring the extent of IAH, but criticisms have also been levelled against this method.Krisement (B: 1997) concluded that the number of observations affects the C index. Inaddition, he criticized of Archer et al's. (B: 1995) decomposed index because the sum of theintra-national and the international indices did not equal the global C index. These indiceswere also criticized by Cañibano and Mora (2000), who noticed the failure to include asignificance measure. In their study, Cañibano and Mora used the C index and proposed abootstrapping test to calculate the significance of a change in the C index value. Another testto measure the extent of IAH was the Wilcoxon test employed by Lainez, Callao and Jarne(B: 1996) and also Aisbitt (B: 2001).

4.4.6.2. Statistical methods. A chi-square test was utilized by Tay and Parker (B: 1990) toinvestigate the extent of international accounting harmonization. Although the chi-square iseasily calculated, it has several limitations because it does not consider the sample size and itsvalue is not significant when the number of observations is low. To measure the extent of

7 Reviews of the literature on this theme can be found inMorris andParker (B: 1999) andCañibano andMora (B: 2000).


harmonization in Sweden, Cooke (B: 1989) used Cramer's V test and the coefficient ofcontingency (C) as a supplement to the chi-square test. Krisement (B: 1997) also appliedCramer's V test to measure the extent of harmonization of accounting practices in nineEuropean countries. Another statistical test used to measure the extent of harmonizationinvolves the generation of linear regression models such as those developed by Archer,Delvaille and McLeay (B: 1996) and McLeay et al. (B: 1999). Taplin (B: 2003) argued thatthe H and C indexes are not adequate to measure the level of accounting harmonization. Thisis because there is a significant difference between an index (H or C) calculated for the sampleand an index created for a population. He proposed that the standard error should be used. Asummary of these different methodological approaches is shown in Table 5. Virtually all of thestudies on this theme were empirical (16 out of 17 studies total)(see Table 4).

4.4.7. New theme: Implementation of IAS/IFRS in different countriesWith respect to the implementation of IAS/IFRS, Glaum (B: 2000) investigated the

evolution of German companies' attitudes towards financial reporting standards over aperiod of three years (1994–1997) using an empirical study. The German companies studiedwere characterized as having a negative attitude toward British and American standards(IASs/US GAAP) at the beginning of the study. Three years later, they changed theirattitudes and accepted IASs. The transition to IAS/IFRS has also been investigated in Asiancountries such as Japan and China. For example, Kikuya (B: 2001) discussed theparticipation of Japan in IAS/IFRS after 1990. Other studies of this nature included those ofCooke (B: 1991), Raty (B: 1992), Guenther and Hussein (B: 1995), Street and Bryant(B: 2000), Chen et al. (B: 2002), Abd-Elsalam and Weetman (B: 2003), Larson and Street(B: 2004), and Xiao et al. (B: 2004). From a methodological standpoint, the research in thisarea was evenly divided between empirical studies (five out of ten studies) and descriptive/normative studies (five out of ten studies)(see Table 4).

4.4.8. Summary of the research themes and research methodologies used during theMature Period

In comparisonwith the Initial Period, and the Intermediate Period, theMature Period (1990–2004) was characterized by an increase in the volume of research (21 articles in the InitialPeriod, 46 in the Intermediate Period, and 135 in the Mature Period). There were also moreresearch themes. In addition to the recurring themes of Accounting Uniformity, ComparativeStudies,Factors of the Environment, andAccountingDirectives there were several new themes,including: the Impact on Share Prices and Returns,Measures of the Extent of Harmonizationand Implementation of IAS/IFRS. These new themes reflected an even greater increase in theuse of empirical research. Of the 135 articles published during the Mature Period, 67 (50%)were empirical studies versus 14% in the Initial Period and 30% in the Intermediate Period. Twonew themes in this period, the Impact on Share Prices and Returns andMeasures of the Extentof Harmonization relied almost exclusively on empirical research (see Table 4).

The principal journals for the publication of IAH research during the Mature Period wereEuropean Accounting Review, which published 26 (19%) of the 135 articles, and TheInternational Journal of Accounting, which published 25 (19%) of the articles. Otherimportant outlets were Abacus (12 articles), Accounting and Business Research (11 articles),Accounting Horizons (11 articles) and Journal of Accounting Research (10 articles). In

Table 5Empirical studies measuring extent of IAH and tests used

Authors (see Appendix B) Tests used

H C Cmodified I Imodified ×2 Others

Van der Tas (1988) X X XTay and Parker (1990, 1992) X Concentration indexVan der Tas (1992a, 1992b) X XEmenyonu and Gray (1992) X XArcher, Delvaille and McLeay (1995) XHermann and Thomas (1995) X X XArcher, Delvaille and McLeay (1996) X Linear regressionLainez, Callao and Jarne (1996) X Friedman's test, Wilcoxon's testKrisement (1997) V indexAdhikari and Emenyonu (1997) X XMcLeay et al. (1999) Linear regressionMorris and Parker (1999) X XLainez, Jarne and Callao (1999) XCañibano and Mora (2000) X X Bootstrapping testParker and Morris (2001) X X XAisbitt (2001) X Wilcoxon's testChen, Sun and Wang (2002) XTaplin (2003) X X Standard errorDing, Stolowy and Tenenhaus (2003) Logistic regression


comparison with the Initial and Intermediate Periods, a greater range of journals publishedIAH research during the Mature Period; especially interesting is the increase in the numberof articles published by European Accounting Review.

5. Summary of the trends in IAH research and conclusion

In this review article we have discussed research on international harmonization offinancial accounting standards published in major English language accounting researchjournals during the period from 1965 to 2004. Our discussion has concentrated on identifyingthe trends in IAH research and assessing the ways that this research has grown or beenmodified during the period examined. In summary, it can be seen from Tables 1, 2, 3 and 4that there was a significant increase in the number of IAH articles published (from 21 in theInitial Period, to 46 in the Intermediate Period, to 135 in the Mature Period), and a significantincrease in the use of empirical research methodologies (from 12% in the Initial Period, to30% in the Intermediate Period, to 50% in the Mature Period). There was also an increase inthe number of themes in IAH research, even though some of the themes remained essentiallythe same throughout the 40-year period. The various themes have been influenced byincreasing levels of globalization, leading to demands for greater harmonization of financialaccounting standards on an international basis, and by a growing interest in accountingpractices in countries outside of the United States, particularly on the part of capital marketsresearchers. Certain key events in the process of international harmonization, such as thecreation of the IASC/IASB and the Accounting Directives of the European Union have alsoaffected researchers' interests and the themes that they have pursued.


During the Initial Period of IAH research (from 1965 to 1973), there was a strong concernwith accounting uniformity, and also with comparing accounting practices in differentcountries. There was a belief that by understanding differences in practices, accountinguniformity could be achieved. It was quickly recognized, however, that there were significantimpediments to achieving accounting uniformity on a worldwide basis due to a number offactors, including historical, cultural, economic, legal and political factors. The researchapproaches during this Initial Period primarily involved the use of descriptive compilations ofdifferences in practices, and normative arguments in favor of eliminating differences in orderto achieve the goal of accounting uniformity. After the creation of the IASC, in 1973, theinterests of researchers began to shift towards an investigation of the reasons for differences inpractices as well as advocating for the creation of a conceptual framework that would be ableto reduce or eliminate accounting choices. Various attempts were made to increaseharmonization of accounting practices among countries, including the creation of the IASCFramework (1979), and the agreement between IOSCO and the IASC that the IASC wouldestablish a core set of accounting standards that could be used in international capital markets.These events marked the beginning of a moreMature Period of IAH research (1990–2004) inwhich there began to be more rigor in the research, often borrowing methodologies fromAmerican empirical research. IAH research during this more Mature Period focused oncomparisons between IAS/IFRS and U.S. GAAP, including capital markets effects, andexplanations for differences based on cultural, economic and other factors. This led to studieswhich statistically measured the extent of international harmonization. The changes in thetrends in IAH research over the 40-year period examined are summarized in Table 6.

While uniformity of accounting standards has not yet been achieved, there is now agreater degree of accounting harmonization among industrialized countries, especially incountries that follow IAS/IFRS. Future IAH research will most likely focus on questions thatcan be answered through the use of empirical methodologies like those that have used in themajor North American accounting research journals during the last 25 years. Tables 1, 2, 3,and 4 indicate that there has been an increased use of empirical research methodologies overthe 40-year period studied. These tables also indicate that, while there has been a divergencein the themes of IAH research, there has also been methodological convergence. Futureresearch will probably focus on attempts to measure the extent of compliance with IFRS indifferent countries. It is also expected that there will be an increased level of rigor and greater

Table 6Themes in IAH research 1965–2004

Initial Period 1965–1973 Intermediate Period 1974–1989 Mature Period 1990–2004

Accounting uniformity Accounting uniformity Accounting uniformityConceptual framework Conceptual framework

Comparative studies Comparative studies Comparative studiesFactors of the environment Factors of the environment

Comparisons of the value relevance of IAS versusUS GAAP

Reflections on theIAH process

Studies of theaccounting directives

Studies of the accounting directives

The IASC Measures of the extent of harmonizationImplementation of IAS/IFRS in different countries


use of theory in future research. The themes that were apparent in IAH research during theMature Period will most likely continue. In conclusion, IAH research appears to have movedbeyond Falk's (1994) criticism that most international accounting research lacked rigor andan adequate theoretical underpinning. Hopefully these trends will continue.

Appendix A. English language accounting journals selected for review

Name
Date of inception
Abacus
1965 Accounting and Business Research 1970 Accounting Historians Journal 1977 Accounting Horizons 1987 Accounting, Auditing and Accountability Journal 1987 Accounting, Business and Financial History 1990 Accounting, Organization and Society 1976 Advances in International Accounting 1987 Behavioral Research in Accounting 1989 Contemporary Accounting Research 1984 Critical Perspectives on Accounting 1990 Journal of Accounting and Economics 1979 Journal of Accounting and Public Policy 1982 Journal of Accounting Literature 1982 Journal of Accounting Research 1963 Journal of Accounting, Auditing and Finance 1977 Journal of Business, Finance and Accounting 1969 Journal of International Accounting, Auditing and Taxation 1992 Journal of International Accounting Research 2000 Journal of International Financial Management and Accounting 1989 The Accounting Review 1926 The British Accounting Review 1974 The European Accounting Review 1992 The International Journal of Accounting 1965
Adapted from: Lowe and Locke (2005) and Prather-Kinsey and Rueschhoff (2004).

Appendix B. List of IAH research articles

Abd-Elsalam, O. H., & Weetmar, P. (2003). Introducing International AccountingStandards to an emerging capital market: relative familiarity and language effect in Egypt.Journal of International Accounting, Auditing and Taxation, 12, 63–84.

Aboody, D., Barth, M., & Kasnik, R. (1999). Revaluations of fixed assets and futurefirm performance: Evidence from the UK. Journal of Accounting and Economics, 26,149–178.

Adams, C. A., Weetman, P., & Gray, S. (1993). Reconciling national with internationalaccounting standards. European Accounting Review, 2(3), 471–494.

Adhikari, A., & Emenyonu, E. (1997). Accounting for business combinations and foreigncurrency translation, an empirical comparison of listed companies from developedeconomies. Advances in International Accounting, 10, 45–62.


Ahadiat, N., & Stewart, B. R. (1992). International geographic segment reportingstandards, a case for the harmonization of accounting and reporting practices. TheInternational Journal of Accounting, 27, 45–56.

Aisbitt, S. (2001). Measurement of harmony of financial reporting within and betweencountries, the case of the Nordic countries. European Accounting Review, 10(1), 51–72.

Aitken, M. I., & Islam, M. A. (1984). Dispelling arguments against InternationalAccounting Standards. The International Journal of Accounting, Spring, 25–45.

Alford, A., Jones, J., Leftwich, R., & Zmijewski (1993). The relative informativeness ofaccounting disclosures in different countries. Journal of Accounting Research, 31(Supplement), 183–223.

Alhashim, D. D., & Garner, S. P. (1973). Postulates for localized uniformity inaccounting. Abacus, June, 9(1), 62–73.

Ali, A., & Hwang, L. (2000). Country-specific factors related to financial reporting andthe value relevance of accounting data. Journal of Accounting Research, 38, 1–21.

Amir, E., Harris, T. S., & Venuti, E. K. (1993). A comparison of the value-relevance ofUS versus non-US-GAAP accounting measures using form 20-F reconciliations. Journal ofAccounting Research 31(Supplement), 230–264.

Archer, S., Delvaille, P., & McLeay, S. (1995). The measurement of harmonization andthe comparability of financial statement items, within-country and between-country effects.Accounting and Business Research, 25(98), 67–80.

Archer, S., Delvaille, P., & McLeay, S. (1996). A statistical model of internationalaccounting harmonization. Abacus, 32(1), 1–29.

Ashbaugh, H., & Pincus, M. (2001). Domestic accounting standards, international account-ing standards, and predictability of earnings. Journal of Accounting Research, 39, 417–434.

Ashbaugh, H., & Olsson, P. (2002). An exploratory study of the valuation properties ofcross-listed firms' IAS and US GAAP earnings and book values. The Accounting Review,77(1), 107–127.

Bandyopadhyay, S. P., Hanna, J. D., & Richardson, G. (1994). Capital market effects ofAmerican–Canadian GAAP differences. Journal of Accounting Research, 32, 262–277.

Barker, R. (2004). Reporting financial performance. Accounting Horizons. 18(2),157–173.

Barniv, R., & Fetyko, D. (1997). Attitudes of CPAs and financial executives towardharmonization of international accounting standards: an analytical and empiricalexamination. Journal of Accounting and Economics, 6(2), 149–169.

Barrett, E. (1976). Financial reporting practices, disclosure and comprehensiveness ininternational settings. Journal of Accounting Research, 14(1), 10–26.

Barth, M. E., & Clinch, G. (1996). International accounting differences and their relationto share prices, evidence from UK, Australian and Canadian firms. ContemporaryAccounting Research, 13, 135–170.

Baxter, W. T. (1981). Accounting standards— boon or curse? Accounting and BusinessResearch, Winter, 3–10.

Baydoun, N., & Willett, R. (1995). Cultural relevance of western accounting systems todeveloping countries. Abacus, 31(1), 67–92.

Beazley, G. F. (1968). An international implication for accounting. The InternationalJournal of Accounting, 3(2), 1–10.


Belkaoui, A. (1983). Economic, political and civil indicators and reporting and disclosureadequacy: empirical investigation. Journal of Accounting and Public Policy, Autumn.

Benston, G. J. (1976). Pubic (US) compared to private (UK) regulation of corporatefinancial disclosure. The Accounting Review, July, 493–498.

Bhattacharya, U., Daouk, H., & Welker, M. (2003). The world price of earnings opacity.The Accounting Review, 78, 641–678.

Bhoocha, A., & Stansell, S. R. (1990). A study of international financial marketintegration: An examination of the US, Hong Kong and Singapore markets. Journal ofBusiness, Finance, and Accounting, Spring, 193–212.

Biddle, G. C., & Saudagaran, S. M. (1989). The effects of financial disclosure levels onfirms choices among alternative foreign stock exchange listings. Journal of InternationalFinancial Management and Accounting, Spring, 55–87.

Biddle, G. C., & Saudagaran, S. M. (1991). Foreign stock listings: Benefits, costs and theaccounting policy dilemma. Accounting Horizons, September, 69–80.

Booth, B. (2003). The conceptual framework as a coherent system for development ofaccounting standards. Abacus, 39(3), 310–324.

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Trends in research on international accounting harmonization · Trends in research on international accounting harmonization C. Richard Bakera,⁎, Elena M. Barbub,1 a School of Business,