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| Tekijä: | Bohren, O. Haug, J. Michalsen, D. |
| Otsikko: | Compliance with flexible accounting standards |
| Lehti: | International Journal of Accounting
2004 : VOL. 39:1, p. 1-19 |
| Asiasana: | Accounting standards Investments Models |
| Kieli: | eng |
| Tiivistelmä: | This study examines to what extent firms adhere to the stated intent of noncompulsory accounting standards (here as: a-s.) when reporting for intercorporate investments. The Generally Accepted Accounting Principles (GAAP) in Norway strongly recommend that a 2050% intercorporate investment is accounted for by the equity method rather than the cost method, if the investment is long-term, of strategic importance, and involves significant influence. Even so, it is found that the actual use of the equity method is independent of the duration of the investment period, the fraction of equity held, its recent growth, and the investor's voting power. This lack of compliance suggests that one cannot use the observed choice between the cost method and the equity method to infer the underlying characteristics of the investment as specified by the a-s. Flexible GAAP may therefore not induce firms to disclose the information that the GAAP were designed to produce. |
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