附录Observations on measuring the differences betweendomestic accounting standards and IASChristopher W. Nobes *University of London, Royal Holloway, Egham Hill, Egham, Surrey TW200EX, United KingdomKeywords:International accounting differences,Rules versus practices,Biases in dataAbstract: In an earlier edition of this journal, Ding et al. use data in GAAP 2001 to assess determinants and effects of differences between domestic and international standards. This paper examines whether those data are suitable for the purposes of academic research by outlining the biases and particular features of GAAP 2001. The main problem with the data for research is that the differences from IAS that it records, which focus on rules, are of varying importance for accounting practice. This raises questions about the equal weighting applied by Ding et al. This paper also questions their distinction between absence of IAS requirements and divergence from those requirements. Some doubts are also raised about the independent variables.1. IntroductionDing et al. (2007) use the data of Nobes (2001) in order to assess the determinants and effects of differences between domestic and international accounting standards (IAS). Many other authors1 refer to the same data for various purposes. As Ding et al. report, the data relate to the accounting rules in force at the end of 2001 in 62 countries, of which they choose 30 countries. The original data for each country were divided into four categories: absence of recognition/measurement rules (compared to IAS), absence of disclosure requirements, inconsistencies in rules (compared to IAS) affecting many enterprises, and inconsistencies affecting certain enterprises. D ing et al. add the first two categories together as ……absence”, and the second two as ……divergence”.As the preparer of the data (called hereafter …GAAP 2001‟), I comment here onits nature and on its use in academic research, such as that of Ding et al. I do so under five headings in Section 2. I then make some observations about their particular paper in Section 3. Conclusions are reached in Section.4. As well as adding some caveats to the findings of Ding et al., this paper might be helpful to future users of the data in GAAP 2001.2. The data2.1. Fit for purpose?Ding et al. (2007, p. 3) refer to the use of Price Waterhouse (PW) data in prior research, which includes that by da Costa et al. (1978), Frank (1979), and Nair and Frank (1980). Nobes (1981) had earlier noted that it is dangerous to use these data for academic research because, among other problems, they were not designed for the purpose. Does use of the data in GAAP 2001 suffer from this problem? Although it is not reported in GAAP 2001, the motivation for that survey was to protect large accounting firms from criticism (by the World Bank and others) resulting from the then recent collapse of companies and economies in the Far East. The survey aimed to reveal the existence of the large differences from IAS (or absences of requirements compared to IAS) in the accounting rules of many countries so that poor reporting would not be blamed on poor auditing. The objective was to focus the attention of regulators in any particular country on improving accounting rules rather than on attacking the audit profession. As such, the survey‟s purpose was not to enable international comparisons, let alone to provide data for academic research. Nevertheless, as long as there are no systematic biases in the data, it might be reasonable to use them for research. For example, whereas the PW data started from a questionnaire that focused on differences between US and UK accounting (thus highlighting differences between these two countries), I am not aware of any such national bias in GAAP 2001. The reference point for comparisons was International Accounting Standards (IAS), which is a bias, but this need not affect the purpose of Ding et al. This bias is discussed later (see Section 2.3).2.2. Rules not practicesIn addition to the national bias in the PWdata, a further problem noted inNobes(1981) is that differences in the rules (de jure differences) are mixed with those relating to practices (de facto differences). How does the GAAP 2001 data compare? GAAP 2001 does not suffer from this problem. It records only de jure differences between national and IAS rules, not de facto differences between national and IAS practice. Although not so serious a limitation as would be created by mixing rules and practices, the concentration in GAAP 2001 on rules rather than practices could cause problems for research, which Ding et al. do not discuss. For example,if a nation‟s rules do not require a particular item to be disclosed but companies often disclose it in practice, then this ……absence” of a rule should perhaps be ignored. Or, if a national system (unlike IAS 38) allows internally-generated research costs to be capitalized but in practice companies do not capitalize, then the ……divergence” in rules is perhaps irrelevant. Another aspect of this is that some de jure differences do not lead to de facto differences in a particular country because the issue is irrelevant. For example, the absence of rules on pension accounting is of little importance in China because Chinese companies do not generally run defined benefit pension plans. More subtly, both ……inconsistency” categories in GAAP 2001 (see the first paragraph of this paper)contain two types of inconsistency with IAS: (i) where the national rule and the IAS is incompatible (e.g. if the national rule required LIFO but IAS required FIFO), and (ii) where the national rule would not ensure IAS compliance (e.g. if the national rule allowed either LIFO or FIFO, but IAS required FIFO).The former inconsistency is more serious. Indeed, the latter may be of no practical importance (e.g. if companies using the national rule choose not to use LIFO).2.3. An IAS biasThe GAAP 2001 data were based on looking at accounting rules from one direction: the content of IAS. So, if a national system had more rules or more restrictive rules than IAS had, this did not show up. For example, US GAAP covered many issues on which IAS was silent (e.g. oil and gas accounting); and UK GAAP did not allow LIFO whereas IAS did. Since these types of difference are not covered by GAAP 2001, they were not included by Ding et al. (as they note in their Appendix A).If these differences were included, it would make the US and the UK look more different from IAS than the ……absence” and ……divergence” measures suggest, but i t would not much affect the position of the Netherlands, where the rules were generally less detailed or less restrictive than IAS.2.4. 111 topics but 79 survey questionsDing et al. (in Appendix A) notice that some topics in the survey do not correspond with the original survey questions asked. This is because the survey results were prepared after an interactive process. First, I prepared the questions by analysing the whole of IAS, assessing which were its key requirements. Country teams of senior techn ical staff replied to the questions. I asked for clarifications, often disputing country answers. Sometimes, new issues turned up. Consensus was eventually reached, and the country teams signed off on the lists of differences. This also explains another feature of GAAP 2001 upon which Ding et al. comment: that the country lists of differences are not in exactly the order of the original questions. They are broadly in the order of: (i) consolidation issues, (ii) assets, and (iii) liabilities. However, an exact order is less important if there is no intention to compare countries.Incidentally, researchers using other data might consider contacting the preparers of the data in order to ask questions such as these.2.5. Respondent behaviorAnother possible bias in the data is behavioral. Some countries like to be seen to be ……international” and therefore to be complying with IAS. This includes many developing countries. By contrast, in 2001 (before the Enron/Andersen debacle), the US was emphasizing that its accounting was different from (i.e. better than) IAS (e.g. Bloomer, 1999). There was thus pressure from some countries to minimize the list of differences and from a few others to maximize it. I believe that we did not give way in the former case, but readers of the US entry in GAAP 2001 might notice that some of the ……divergence” from IAS is abstruse, meaning that US divergence is exaggerated.3. MethodologyThis section contains some specific observations on the paper by Ding et al.(2007), under three headings.3.1. AdditivityDing et al. need to add items together so as to create scores for countries in order to perform numerical analyses. In GAAP 2001, we resisted the temptation to add items together because the items are clearly of differing importance. The above Sections 2.2 and 2.5 mention some examples of this. It would require a great deal of work and subjectivity to weight items according to importance. Not surprisingly, Ding et al. did not do it. However, this might introduce systematic biases. First, because less financially complex countries do not need the most complex rules, several of the ……absences” in developing countries might be of no practical importance. So, the ……absence” scores for those countries are exaggerated.Secondly, as noted earlier, Ding et al. reduce the problem of additivity by creating two distinct to tals: absence and divergence. Nevertheless, they add the two ……inconsistency” categories together, despite the attempt in GAAP 2001 to suggest that the second category was of less widespread practical importance. This might constitute a further systematic bias because, for example, many of the abstruse points of US divergence (see 2.5 above) were deliberately put into the second category. Future researchers could calculate whether their results are robust to, for example, a double weighting of the first category‟s items compared to those in the second.3.2. Are there really two separate dimensions?As noted above, Ding et al. construct measures of two separate ……dimensions” of difference from IAS: absence and divergence. They say (p. 4) that this is their paper‟s first contribution to the literature.However, I suggest that the distinction between the measures might not be useful. In the end, the important issue is whether accounting practices are ……good”2or are comparable among firms nationallyor internationally. The purpose of GAAP 2001 was to catalog various aspects of deficiency in rules thatcould contribute towards poor or non-comparable accounting. In that context, the absence of rules isnot a separate dimension from divergence of rules, as now explained.Suppose that IAS requires FIFO for inventory valuation, Country X requiresLIFO, Country Y allows FIFO or LIFO, and Country Z has no rules. Countries X and Y wil l turn up in Ding et al.‟s ……divergence” from IAS, whereas Country Z will exhibit ……absence”. However, whereas companies in Country X will indeed diverge from IAS practices (assuming that companies obey the rules), companies in Country Y (and in Z) might mostly be consistent with IAS (i.e. use FIFO). In other words, some examples of de jure divergence lead to the same result as absence, and some do not.Most of the de jure absences recorded in GAAP 2001 relate to whole accounting topics (e.g. impairment or pensions), so are likely to be greater causes of de facto divergence than some of the detailed de jure divergences.For researchers who are interested in accounting practice or in the effect of de jure differences on accounting practice, I suggest that there are not two dimensions. The absence of rules on whole accounting topics is likely to be a particularly major cause of divergence in practice.By creating two dimensions, as dependent variables, Ding et al. have to double up all their generating of hypot heses. That is, for each of their five independent variables (determinants), they create hypotheses for both absence and divergence. I suggest that this is artificial, as illustrated in 3.3 below which notes that Ding et al.‟s hypothesis relating to how equity weakness causes divergence is wholly expressed in terms of how equity weakness might affect absence of disclosures.3.3. Independent variables3.3.1. Accounting professionDing et al. make ……the importance of the accounting profession” an independent variable for difference between national standards and IAS. They list it as a ……determinant”. However, in their discussion (e.g. Section 3.1.4), they more carefully say that the two are ……associated”.I suggest that the direction of influence is more likely t o be from accounting to the profession. Nobes (1998) discusses this, and concludes that the amount and style of financial reporting affects the quantity and role of auditors. For example, the presence of large numbers of listed companies in the USA and the requirements for quarterly reporting, extensive disclosure and some use of fair values led to a need formore auditors in the USA in 2001 than in countries where these things were absent (e.g. in Germany).Later, in their 3.2.4, Ding et al. talk of the importance of the profession in the context of setting standards. However, in most countries, the accounting rules are largely controlled by the public sector (e.g. in Belgium, China, France or Germany) or by independent private-sector trusts (e.g. the UK or the US). Japan has moved from the former to the latter. So, again, the profession is not directly relevant as an independent variable.However, there is probably some ……feedback”. For example, because the accounting profession becomes large, it is willing and able to take the lead in standard-setting (e.g. in the US until 1973, in the UK until 1990, and internationally until 2001).3.3.2. Equity marketsWhen formulating an hypothesis for the variables affecting divergence from IAS (in their 3.2.5),Ding et al. discuss the need for an IAS-like quantity of disclosures in strong equity countries. This, they suggest, should lead to smaller divergence from IAS in such countries than in weak equity countries. However, none of the survey topics included in their me asures of divergence (the ……inconsistency” categories of GAAP 2001) were related to disclosure. That is, their hypothesizing relates to the causation of a high quantity of disclosure but their dependent variable is not related to the quantity of disclosure. So, their whole sub-section is of doubtful relevance.My hypothesis would be that strong equity markets need a certain style of recognition and measurement, and comparability of it (broadly IAS style). Therefore, there will be a negative association between equity strength and divergence from IAS.4. ConclusionDing et al. (2007) provide a clear and interesting paper. Their conclusion that the absence of accounting rules on IAS topics in many countries is associated with weak equity markets and with concentrated ownership is convincing, and is indeed the main proposal in the general model of the development of accounting rules in Nobes(1998).In this paper, I provide explanations for various features of GAAP 2001 that had been commented on by Ding et al. I also ask whether those data are suitable for the purposes of academic research, including that by Ding et al. I conclude that they might be, although there are some systematic biases in the data. In particular, (i) the data leave out the aspect of ……divergence” caused by certain national rules (e.g. US or UK) being more detailed or more restrictive than IAS in 2001, (ii) against that, one or more of these countries might have wanted to exaggerate their divergence from IAS, (iii) the equal weighting of widespread and less widespread divergences is questionable, and (iv) the ……absence” scores for developing countries are overstated because some topics are not relevant in those countries. Other potential problems might not be systematic, e.g. the concentration on rules rather than on practices.A question concerning D ing et al.‟s methodology is whether the GAAP 2001 data have meaningful additivity. While accepting that the research requires scores to be created for each country, major problems of weighting need to be considered.More fundamental to Ding et al.‟s paper is the question whether their separate dimensions of absence and divergence are valid. I suggest that, in terms of their effects on differences from IAS practice, some de jure absences are more serious than some de jure divergences, and vice versa. Some of the absences are just extreme forms of divergence, others might be of little practical importance. The separation of the two dimensions creates a cumbersome and artificial doubling up of hypotheses.This paper also questions the direction of causality for the association between accounting rules and the accounting profession. Further it questions the explanation of the hypothesis concerning the effect of equity markets on divergence, given that the dependent variable in the hypothesis concerns disclosure but the data for it does not.AcknowledgementsThe author is grateful for comments on an earlier draft from ErlendKvaal and R.H. Parker. He is also grateful to PricewaterhouseCoopers for sponsorship of research.ReferencesBloomer, C., 1999. The IASC-US Comparison Project, FASB.Da Costa, R.C., Bourgeois, J.C., Lawson, W.M., 1978. A classification of international financial accounting practices. International Journal of Accounting 13 (2), 73–85. Ding, Y., Hope, O.-K., Jeanjean, T., Stolowy, H., 2007. Differences between domestic accounting standards and IAS: measurement, determinants and implications. Journal of Accounting and Public Policy 26, 1–38.Frank, W.G., 1979. An empirical analysis of international accounting principles. Journal of Accounting Research, Autumn, 593–605.Nair, R.D., Frank, W.G., 1980. The impact of disclosure and measurement practices on international accounting classifications. Accounting Review 55 (3), 426–450. Nobes, C.W., 1981. An empirical analysis of international accounting principles – a comment. Journal of Accounting Research 19 (1), 268–270.Nobes, C.W., 1998. Towards a general model of the reasons for international differences in financial reporting. Abacus 34 (2),162–187.Nobes, C., (Ed.), 2001.GAAP 2001. A Survey of National Accounting Rules Benchmarked Against International Accounting Standards. Arthur Andersen and other Firms.journal homepage: /locate/jaccpubpol观察测量之间的差异国内的会计和国际会计准则伦敦大学皇家霍洛威，埃格姆山，埃格姆，英国[摘要]：在一本较早版本的杂志上，丁等人在2001年运用美国通用会计准则的使用数据来评估和决定因素与国内和国际标准的差异分析。