Given the differences between different nations’ accounting and reporting practices, international investors must often use financial data that are not comparable. A survey of institutional investors, corporate issuers, investment underwriters and market regulators in Germany, Japan, Switzerland, the United Kingdom and the United States attempts to ascertain if international accounting differences actually affect market decisions.
Approximately one-half of the survey participants feel that international accounting diversity influences their capital market decisions. International accounting diversity may thus be a barrier that affects the pricing of securities and the compositions of international portfolios. Roughly one-half of the market participants surveyed, however, feel that they have effective ways of coping with diversity. These coping mechanisms may be useful for other investors and issuers making capital market decisions.
