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A comparative analysis of the impact of accounting differences on profits and return on equity

48 citations0/0 files storedEuropean Accounting Review

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Auditing, Earnings Management, Governance Accounting Theory and Financial Reporting Financial Reporting and Valuation Research

Abstract

The purpose of this paper is to make a quantitative comparative analysis of differences between Swedish accounting practice and US GAAP. The empirical data consisted of eighty-four US GAAP reconciliations of income statements and shareholders' equity, disclosed in Swedish annual reports during 1981–90. Prior qualitative research has suggested that Swedish accounting practice is conservative compared with that in the USA. However, the empirical analysis of profits and return on equity provided little support for this hypothesis. Instead, there were indications of a less conservative accounting treatment in the Swedish accounts compared with US GAAP. The most material differences between Swedish profits and those calculated using US GAAP were caused by differences in treatment of foreign currency translation, income taxes, sale and leaseback transactions and business combinations.

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1989Disclosure in the Corporate Annual Reports of Swedish Companies 2003Comparative International Accounting 1981Comparative International Accounting 1983A JUDGEMENTAL INTERNATIONAL CLASSIFICATION OF FINANCIAL REPORTING PRACTICES 1983The impact of disclosure and measurement practices on international accounting classifications**This article is reprinted, with permission, from The Accounting Review (July, 1980) pp 426–450 1980The Impact of International Accounting Differences from a Security-Analysis Perspective: Some European Evidence 1991A Comparative International Analysis of the Impact of Accounting Principles on Profits: The USA versus the UK, Sweden and The Netherlands 2004European Financial Reporting

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