An Empirical Examination on the Degree of Accounting Harmonization of PPE and Inventory

Abstract

This study aims mainly to investigate the level of accounting harmonization on two main areas in accounting, valuation, and depreciation methods of property plant equipment (PPE), and valuation and costing of inventories. This empirical investigation includes three GCC countries, Kingdom of Bahrain, Kingdom of Saudi Arabia (KSA) and United Arab Emirates (UAE). To achieve the main objective of the study, "I" index, which was developed by [1] was employed to measure the accounting harmonization on a sample of 139 listed non-financial firms in the three countries (17 firms from Bahrain, 76 firms from KSA, and 46 firms from UAE) for a three-year period, 2016 -2018. The results of the study showed that there is a high level of accounting harmonization among the three countries in choosing the method of valuation and depreciation of PPE and inventory valuation, however, we found above moderate level of accounting harmonization in inventory costing.