Timothy S. Doupnik

Interpretation of uncertainty expressions: a cross-national study

Abstract This study investigates the effect of language-culture and linguistic translation on the interpretation of verbal uncertainty expressions found in International Accounting Standards. Data are collected from US Certified Public Accountants and German-speaking Wirtschaftsprufer (chartered or certified accountants) to test three hypotheses. One group of German speakers evaluated uncertainty terms expressed in German and another group in English. The results indicate significant differences in interpretation across the three groups. Some differences are attributed to a language-culture effect and others to a translation effect, with the language-culture effect being more pervasive. These results raise the question of whether International Accounting Standards can be applied consistently across language-cultures.

Influence of Culture on Earnings Management: A Note

This article examines the influence of national culture on earnings management across a broad cross-section of countries. In addition to examining the relation between culture and earnings management in general, two different types of earnings management are examined, namely, earnings smoothing and earnings discretion. Regression results indicate that, as expected, the cultural dimensions of uncertainty avoidance and individualism are significantly related to earnings management, even after controlling for investor protection and other legal institutional factors. Culture has a stronger relation with earnings smoothing than with earnings discretion, and cultural dimensions explain a greater percentage of the variation in aggregate earnings management and earnings smoothing than do investor protection variables. These findings suggest that there is a significant link between culture and cross-national differences in earnings management, especially in the form of earnings smoothing.

Geographic area disclosures under SFAS 131: materiality and fineness

Abstract This paper describes and evaluates certain aspects of the enterprise-wide geographic area disclosures provided by Fortune 500 companies in the implementation of SFAS 131, “Disclosures about Segments of an Enterprise and Related Information.” The first objective of this study is to determine how companies are complying with the materiality criterion of SFAS 131 for determining when an individual country is reportable. The second objective is to evaluate whether foreign operation disclosures provided by companies in accordance with SFAS 131 result in a finer set of information than was provided under SFAS 14. The results suggest that there is considerable diversity among companies in the way that materiality is defined, with a majority of companies that provide country-level disclosures using quantitative thresholds less than 10%. For a large percentage of companies, the information provided under SFAS 131 appears to be finer than the information provided under SFAS 14. However, a significant minority of companies has taken a step backward in this regard.

THE EVOLUTION OF FINANCIAL STATEMENT INDEXATION IN BRAZIL

Accounting for inflation is one of the more controversial topics in financial reporting. This paper traces the evolution of the system of inflation accounting used in one of the most highly inflationary economies in the world—Brazil. The history of inflation accounting in Brazil (known as monetary correction) is divided into three time periods: pre-1964, 1964 to 1976, and 1976 to the present. The events pertinent to the system of monetary correction in each of these periods are first discussed and then evaluated. It is shown that the system of monetary correction has been subject to massive political pressures since its inception, but gradual improvements have taken place over the years.