GAAP choice by European companies
Abstract
Purpose
This paper examines the adoption of internationally accepted accounting standards by European companies listed on the New York Stock Exchange. The study focuses on the evolution of the use of different generally accepted accounting principles (GAAP), and on the features of those companies that have adopted these non‐local GAAP.
Design/methodology/approach
The sample was obtained from 336 Forms 20‐F for the period 1997‐2000. Using the information included in contingency tables and Pearson chi‐square statistic, proves whether there are any relationships between GAAP choice and other explanatory factors, i.e. country, size, industry, time listed and profitability.
Findings
The majority of the analysed companies keep using domestic‐GAAP. IAS firms are mainly non‐financial entities based in Switzerland and more profitable than US‐GAAP companies, which are mainly financial entities or companies engaged in SIC code 7 (services) based in Germany and less profitable than IAS firms.
Research limitations/implications
The most important limitation of the paper is the period of the study. It is admitted that a deeper analysis would imply obtaining data from the most recent years.
Originality/value
Bearing in mind the next adoption in Europe of International Financial Reporting Standards issued by the IASB, the results of the paper give a clue about the type of European multinationals which tend to adopt non‐local GAAP, and which kind of internationally accepted accounting standards they preferentially adopt.
Keywords
Citation
Ortiz, E. (2005), "GAAP choice by European companies", European Business Review, Vol. 17 No. 1, pp. 36-51. https://doi.org/10.1108/09555340510576258
Publisher
:Emerald Group Publishing Limited
Copyright © 2005, Emerald Group Publishing Limited