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How and why corporate governance models affect choices of Generally Accepted Accounting Principles

How and why corporate governance models affect choices of Generally Accepted Accounting Principles We investigate factors determining firm's governance models to assess how methods of resolving information asymmetry affect accounting policy choices. Companies with stakeholder governance models tend to use private communication to resolve information asymmetry. Our results suggest that firms with a stakeholder governance model choose to report under their home GAAP over IFRS/US GAAP when listed in the USA. We infer these results to indicate that these firms have contractual agreements with other stakeholders such as creditors and/or they want to avoid their main stakeholders perceiving they no longer have access to relatively more private information than other external stakeholders. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Accounting, Auditing and Performance Evaluation Inderscience Publishers

How and why corporate governance models affect choices of Generally Accepted Accounting Principles

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd. All rights reserved
ISSN
1740-8008
eISSN
1740-8016
Publisher site
See Article on Publisher Site

Abstract

We investigate factors determining firm's governance models to assess how methods of resolving information asymmetry affect accounting policy choices. Companies with stakeholder governance models tend to use private communication to resolve information asymmetry. Our results suggest that firms with a stakeholder governance model choose to report under their home GAAP over IFRS/US GAAP when listed in the USA. We infer these results to indicate that these firms have contractual agreements with other stakeholders such as creditors and/or they want to avoid their main stakeholders perceiving they no longer have access to relatively more private information than other external stakeholders.

Journal

International Journal of Accounting, Auditing and Performance Evaluation – Inderscience Publishers

Published: Jan 1, 2006

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