Globalisation and convergence of accounting: a contextual analysis of issues, attitudes and their implications in the German context

This thesis provides a holistic examination of convergence with the adoption of International Financial Reporting Standards (IFRS) in Germany by taking into account the influence of political, legal, economic, social, cultural and historical factors on accounting principles and practices. Specifically, this study examines issues in the convergence process that may create constraints in achieving global comparability and importantly may challenge the International Accounting Standards Board’s (IASB) main objective, namely, ‘to develop, in the public interest, a single set of high quality, understandable, enforceable and globally accepted financial reporting standards based on clearly articulated principles’ (IFRS Foundation 2011a, Preface to IFRS). In contrast to a significant number of prior research that has largely focused on quantifiable and narrowly focused theoretical approaches, this thesis provides a holistic examination with an emphasis on multi-disciplinary perspectives. The contextual analysis contributes to international accounting research by providing deeper and sharper insights into the convergence process as well as potential challenges and constraints to future development of IFRS and the IASB. Specifically, the findings show that international politics and power structures have an increasing influence on Germany’s national accounting developments often without adequate consideration of normative evaluations by German stakeholders, which may result in challenges to future development and acceptance of IFRS in Germany. Moreover, the findings provide evidence of specific concerns regarding the political nature of the IASB, the technical superiority of IFRS and the extensive use of professional judgements in IFRS. These concerns are further substantiated by evidence that professional accountants from Germany and Italy show systematic differences in their exercise of professional judgment, which raises concerns about the potential to achieve the IASB’s main objective of international comparability of financial reporting. Accounting researchers, practitioners, educators and accounting standard setters are likely benefit from these insights that show the importance of contextual factors in the convergence process. Indeed, the findings contribute to international accounting research and practice by emphasising that convergence is a complex social and political process that requires researchers to critically examine contextual environments of countries rather than simply focus on measurement, quantification, simplification and categorisation.