Different Approaches to Corporate Reporting Regulation

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Accounting and Business Research
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Different approaches to corporate reporting regulation: How jurisdictions differ and why Christian Leuz
a a b c d

J. Sondheimer Professor of International Economics, Finance and Accounting, University of Chicago Booth School of Business, 5807 South Woodlawn Avenue, Chicago, IL, 60637–1610, USA E-mail: b c d

Research associate at the National Bureau of Economic Research, Cambridge, MA European Corporate Governance Institute, Brussels

Fellow of the Wharton Financial Institutions Center, Philadelphia, PA Version of record first published: 04 Jan 2011.

To cite this article: Christian Leuz (2010): Different approaches to corporate reporting regulation: How jurisdictions differ and why, Accounting and Business Research, 40:3, 229-256 To link to this article: http://dx.doi.org/10.1080/00014788.2010.9663398

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Accounting and Business Research, Vol. 40. No. 3 2010 International Accounting Policy Forum, pp. 229–256

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Different approaches to corporate reporting regulation: how jurisdictions differ and why Christian Leuz*
Abstract — This paper discusses differences in countries’ approaches to reporting regulation and explores the reasons why they exist in the first place as well as why they are likely to persist. I first delineate various regulatory choices and discuss the trade-offs associated with these choices. I also provide a framework that can explain differences in corporate reporting regulation. Next, I present descriptive and stylised evidence on regulatory and institutional differences across countries. There are robust institutional clusters around the world. I discuss that these clusters are likely to persist given the complementarities among countries’ institutions. An important implication of this finding is that reporting practices are unlikely to converge globally, despite efforts to harmonise reporting standards. Convergence of reporting practices is also unlikely due to persistent enforcement differences around the world. Given an ostensibly strong demand for convergence in reporting practices for globally operating firms, I propose a different way forward that does not require convergence of reporting regulation and enforcement across countries. The idea is to create a ‘global player segment’, in which member firms play by the same reporting rules and face the same enforcement. Such a segment could be created and administered by a supra-national body like IOSCO. Keywords: accounting; regulation; IFRS; US GAAP; SEC; standard-setting, mandatory disclosure; political economy

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1. Introduction and overview
Corporate reporting regulation has seen substantial...
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