Coping with International Accounting Diversity: Fund Managers' Views on Disclosure, Reconciliation, and Harmonization*

Abstract

Abstract In this paper we examine the practices of representative samples of U.S.‐ and U.K.‐based international investment managers in order to determine whether and how they are affected by accounting diversity and, therefore, by the presence or absence of quantitative reconciliation, and what their views are towards greater disclosure, reconciliation, or harmonization. We find that all three forms of reduced diversity‐more uniform disclosure, quantitative reconciliation to U.S. GAAP, and international harmonization are viewed as good things by managers. None, however, appears to be critical in the investment process. Reconciliation is a costly requirement and we conclude that the SEC's insistence on reconciliation is not well‐founded and that other means, especially greater emphasis on mutual recognition subject to certain minimum standards of disclosure and presentation, would be more effective.