To read this content please select one of the options below:

International financial analysis and the handicap of accounting diversity

Isabel Martínez Conesa (University of Murcia, Faculty of Business and Economics, Murcia, Spain)
Esther Ortiz Martínez (University of Murcia, Faculty of Business and Economics, Murcia, Spain)

European Business Review

ISSN: 0955-534X

Article publication date: 1 June 2004



Financial analysis at international level has to overcome a lot of obstacles that increase the uncertainty which the financial analyst is used to handling. It is commonly argued by accounting regulators, academics, and so on, that different accounting standards are one of these handicaps. For this reason European listed companies will be required in year 2005 to elaborate consolidated financial statements according to International Accounting Standards. Will it be a solution for the handicaps that face financial analysts? The objective of this study is to see how accounting diversity can be resolved and what are the conclusions of financial analysts in capital markets. The prior hypotheses will be: first, that accounting diversity is not what introduces the most important uncertainty in the international financial analysis, and second, that accounting diversity is avoided instead of being corrected. It is evidenced that the most important factors of diversity are strategies of the company and that analysts try to reduce the impact of accounting diversity, for example, using less biased ratios such as Enterprise Value/EBITDA.



Martínez Conesa, I. and Ortiz Martínez, E. (2004), "International financial analysis and the handicap of accounting diversity", European Business Review, Vol. 16 No. 3, pp. 272-291.



Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited

Related articles