International Accounting and Finance: Introduction

Abstract

Jean-Claude Cosset Jeffrey Kantor During the past two decades, there has been a dramatic growth in the globalization of goods and securities markets, which has required users and preparers of financial statements to focus on internationalization-both the causes and the effects. This, together with the increased volatility of foreign exchange rates and trading imbalances, has dramatically changed the environment in which the firms operate. As a result, academic research has paid increasing attention to international accounting and finance. The papers in this special issue of the Canadian Journal of Administrative Sciences represent quite a diverse sample of current research. Some is essentially theoretical, the rest is primarily empirical. The common element is the link to Canada. Papers grounded in Canadian data incorporate international data or are generalizable to other countries. Papers grounded in nonCanadian data either incorporate Canadian data or discuss implications for Canada. Taken together, the six papers should be of interest to both practitioners and academics. The first three papers deal with international accounting issues. Salatka explores whether, in accordance with the information disclosure theory, voluntary accounting choices may be substitutes for information produced under mandatory accounting rules and whether late adopters of mandatory accounting rules manage information disclosure based upon the chosen accounting method, as opposed to any mandatory rules. Salatka's data, the early and late adoption of Statement of Financial Accounting Standards No. 8, provides results consistent with the information disclosure theory. Implications for Canada are highlighted. Magnan, St-Onge, and Thorne assess and compare the extent of the relationship between organizational performance and executive compensation in Canadian and U.S. firms. Their results suggest that executive compensation in Canadian firms is less dependent upon organizational performance than in U.S. firms. They also find that widely held Canadian firms exhibit a closer relationship between organizational performance and executive compensation than closely held Canadian firms. In the U.S., on the other hand, the impact of ownership control was weak, although it was consistent with the expectation that executive compensation in closely held firms was less contingent upon performance than in widely held firms. The possible reasons for these findings are discussed. Robinson and Venieris examine how environmental factors can cause differences in accounting standards and practices between countries. They propose two economic hypotheses and three cultural hypotheses that predict the accounting systems that should prevail in different environments. The hypotheses are investigated with a case study, using accounting standards, practices, and regulations in Greece and Canada. Their analysis shows that the differences between Greece and Canada are important, even after the advent of the Fourth Directive, which brought a basic level of accounting uniformity to the European Community in 1987. …