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Multinationality: the financial accounting implications

M. Ali Fekrat (Georgetown University)

Managerial Finance

ISSN: 0307-4358

Article publication date: 1 May 1998

1631

Abstract

Summarizes the effects of globalization on financial markets, and the need for accounting practices to keep up with it. Criticizes the Financial Accounting Standards Board Exposure Draft “Accounting for derivatives and similar financial instruments and for hedging activities” for not including the impact of derivative transactions on the risk exposure of a company. Describes Financial Accounting Standards Board collaboration with foreign standard setters, starting with earnings per share and capital structure disclosure. Argues that published financial statements still show the conflict between equity‐holder based accounting and debt‐holder accounting, which has not yet been resolved, despite the EU’s fourth and seventh Directives. Asserts that US and international accounting standards differ in the interpretation by different companies. Predicts that standards will be forced on accountants by the market.

Keywords

Citation

Fekrat, M.A. (1998), "Multinationality: the financial accounting implications", Managerial Finance, Vol. 24 No. 5, pp. 42-52. https://doi.org/10.1108/03074359810765525

Publisher

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MCB UP Ltd

Copyright © 1998, MCB UP Limited

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