Methodology Dissertation Example | Topics and Well Written Essays - 4500 words

Methodology - Dissertation Example Thus, financial reports recorded in this manner make it harder to compare financial reports. This issue has been said to be solved by implementing a standard reporting system or global accounting standards (Hawkins, 2000). Standardized financial reporting has been implemented based on the assumption that it can increase the comparability of financial statements, increase the quality of financial reports, and improve corporate transparency especially in terms of incentives. It has also been determined to be created as a result of the increase in the number of multinational companies or MNCs (Nobes and Parker, 2006). Moreover, Bolt-Lee and Smith (2009) included increase in reporting consistency, better global competition, and increase in the transparency of financial reporting as the benefits of international financial reporting. Moreover, the International Monetary Fund (IMF) in 1999 stated that the financial systems of developing crisis, especially those experiencing financial crisis , can be strengthened by enhancing the financial reporting regulations and practices. Jainkengit (2002) reported an improvement in the economy of Thailand as a result of enhanced financial reporting regulations and practices and transparency or greater disclosure on financial information. Similarly, a study by Daske, Hail, Leuz, and Verdi (2008) explored the effects and consequences of mandatory IFRS (International Financial Reporting Systems) reporting. ... The benefits include increase in stock market value, market liquidity, and lower capital costs. Lastly, the study determined that financial reporting standards are most effective under a strict and strong regulating environment. This is most evident in a study by Barrett (1996) where it was determined that financial reports among American and British companies are more comprehensive because of their disclosure requirements. However, there are factors that affect financial reporting among corporate companies. There is an immense role to be played by economic and political forces in what concerns the shaping of accounting. A study by Suttachai and Cooke (2009) enumerated several factors that affect international financial reporting. The important factors discussed are the environment and culture, wherein environment stands for the legal system, economic system, and other institutional factors. Cooke and Wallace (1990) agree by stating that the environment wherein the company is located can greatly affect financial reporting. Thus, despite the homogeneity in the standards for international financial reporting, it still varies depending on various factors, specifically and most especially in terms of its location and culture. It only imply that although they follow the same standards or format for reporting, the quality of data and the means on which they measure still varies (Suttachai and Cooke, 2009), which is ultimately the purpose of standardizing financial report systems: to decrease and eventually eliminate variation (Nobes and Parker,2006). On the other hand, Choi (2002) stated that harmonization or standardization of financial practices and reports increase the comparability and compatibility of financial reports by limiting the