An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Richard D. Morris
University of New South Wales

Sidney J. Gray
University of Sydney

Abstract: We examine if countries matter more than firms in explaining variance of financial transparency among 300 Asian companies in 2002. From an IFRS-based checklist of 441 items, we derived three indexes: TRANSP covering all items, TRANSPMAN items required by local standards; TRANSPVOL items not so required. Our data cover more companies per country, in much greater depth, than CLSA, CIFAR or Standard & Poor’s datasets, albeit for six countries. Each index differs significantly across countries. Country-level variables matter much more than firm-level variables in explaining variance in all indexes. Bank oriented economy may be the most important country-level predictor but we cannot be sure because country variables are highly inter-correlated. Significant firm variables are relatively stable across country-level controls for TRANSPVOL, but not for TRANSP or TRANSPMAN. Changing country-level variables is difficult, so accounting convergence in Asia will not be easy.

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