Global Accounting Harmonization from a German Perspective: Bridging the GAAP

This paper presents the results obtained from a survey of various aspects of international accounting harmonization in which we submitted questionnaires to senior managers of major German companies and university professors of accounting. Most corporate managers were at least sceptical with regard to US-GAAP principles. The professors held divergent views, ranging from clear rejection to decided approval. Almost all participants agreed, albeit to different degrees, that German accounting rules reduce the demand for German shares abroad. With respect to the information value for investors in capital markets, the majority of managers had a positive opinion of German accounting. They further assumed that US accounting practice has a negative effect on capital market conditions in that it encourages short-term thinking. The academics, in contrast, were more in favor of US accounting and more critical towards German accounting. In the light of these results it was surprising to find that German accounting experts, including the managers interviewed, were far from rejecting further harmonization. Only a quarter of the managers and less than 10 per cent of the professors were decidedly against any modification of current German accounting rules. However, the experts clearly wished to limit the harmonization of accounting to consolidated financial statements. The majority of managers were in favor of giving German corporations the option of preparing their consolidated financial statements in accordance with either the German Commercial Code (HGB), IAS or US-GAAP. The academic experts, on the other hand, wished to see IAS as the authoritative basis for consolidated financial statements.