Accounting and Business Research
Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/rabr20
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
PLEASE SCROLL DOWN FOR ARTICLE Full terms and conditions of use: http://www.tandfonline.com/page/terms-and-conditions This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly forbidden. The publisher does not give any warranty express or implied or make any representation that the contents will be complete or accurate or up to date. The accuracy of any instructions, formulae, and drug doses should be independently verified with primary sources. The publisher shall not be liable for any loss, actions, claims, proceedings, demand, or costs or damages whatsoever or howsoever caused arising directly or indirectly in connection with or arising out of the use of this material.
Accounting and Business Research, Vol. 40. No. 3 2010 International Accounting Policy Forum, pp. 229–256
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
Downloaded by [University of Nottingham-Ningbo] at 20:16 12 January 2013
1. Introduction and overview
Corporate reporting regulation has seen substantial...