Title

Compliance with Disclosure Requirements at Germany's New Market: IAS Versus US GAAP

Document Type

Article

Publication Date

3-2003

Publication Source

Journal of International Financial Management & Accounting

Abstract

This research examines compliance with both International Accounting Standards (IAS) and United States Generally Accepted Accounting Principles (US GAAP) for companies listed on Germany's New Market. Based on a sample of 100 firms that apply IAS and 100 that apply US GAAP, we investigate the extent to which companies comply with IAS and US GAAP disclosure requirements in their year–2000 financial statements. Compliance levels range from 100% to 41.6%, with an average of 83.7%. The average compliance level is significantly lower for companies that apply IAS as compared to companies applying US GAAP. This study provides the first systematic evidence regarding the enforcement of US GAAP outside the US, and accordingly not subject to Securities Exchange Commission (SEC) review. The results unveil a considerable extent of non–compliance. The overall level of compliance with IAS and US GAAP disclosures is positively related to firms being audited by Big 5 auditing firms and to cross–listings on US exchanges. Compliance is also associated with references to the use of International Standards of Auditing (ISA) or US GAAS in the audit opinion. The findings add to the growing concerns regarding the lack of effective supervision in the German capital market.

Inclusive pages

64-100

ISBN/ISSN

0954-1314

Comments

Copyright © 2003, Blackwell Publishing.

Publisher

John Wiley & Sons

Volume

14

Issue

1

Peer Reviewed

yes