A Comparative International Analysis of the Impact of Accounting Principles on Profits: The USA versus the UK,Sweden and The Netherlands

This paper explores the extent to which there are material quantitative differences in profits reported under US GAAP compared to profits reported in accordance with generally accepted accounting principles in the UK, Sweden and the Netherlands. From an analysis of Form 20-F reports filed with the SEC in the USA, there is support for the hypothesis that UK GAAP are significantly less conservative than US GAAP. On the basis of a case study approach, it seems that Swedish GAAP tend to be more conservative than US GAAP, particularly when the transfers to reserves are analysed, but there is insufficient evidence to establish a systematic pattern. In the Netherlands, on the other hand, there is evidence to suggest that Dutch GAAP are at the less conservative end of the spectrum of financial reporting measurement practices, in a position relatively similar to that of UK GAAP, although again the evidence is insufficient to establish a systematic pattern.