Global Accounting Rules? Not So Fast

What could be more fundamental than having a single financial language for global business? After all, foreign trade is soaring, as are global capital flows. Companies such as BP Amoco and DaimlerChrysler are trading shares on stock exchanges around the world. At the same time, however, it has become a nightmare for creditors and investors to get reliable and timely financial information in markets such as China or Indonesia. The same goes for reconciling national differences in accounting treatment for key items such as corporate acquisitions or pension liabilities. Remarkably, it is even hard to accurately compare the accounts of companies in the same industry, such as Ford, Toyota, and Volkswagen.

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