Introduction
International accounting is referred to as the accounting records reporting and principles practiced by difference countries around the globe. This include the international and regional harmonization, the risks involved in foreign exchange, the patterns and classifications of accounting in all the developing and communist countries, foreign currency translation and e.t.c. it encompasses a variety of functional areas, namely the managerial, financial, taxation, the information system of accounting and auditing (Choi & Mueller p.12).
International accounting is a key element in making investment decision since companies are able to translate all their annual financial report into different foreign languages thus facilitating their communication with the foreign customer/clients on matters concerning the company’s financial performances and products. The use of limited restatement aims at tapping the foreign capital marketers. For instance reconciliation of U.S GAAP and home country GAAP financial statements were required to come up with secondary statements making it user friendly thereby attracting more investors.
The non- U.S investors finds it hard while entering U.S capital market because they incurs higher costs compared to the U.S investors therefore encouraging the foreign investors to purchase shares from the home market companies. Despite the approach the firm adopts it expected returns or benefits than does not exceed the cost incurred in a particular event.
Small investors preferably adopts the do-nothing approach, this is so by them not investing in the securities of a firm with financial information that investor do not understand and on the other hand avoid investing in individuals foreign securities on property that they are mandated to delegate their financial analysis. In general accounting diversity has in one way or another made the investors decision making process difficult especially in measuring their decision variables.
References
Coopers & Lybrand , C. J. (1993). International Accounting Summaries (2nd ed.). USA
Saudagaran, S. M. (2009). International accounting: A user perspective. Chicago, IL: CCH.
