Differences in the degree of development of the capital markets in countries and their effect on the development and use of generally accepted international principles of accounting.
A capital market maybe equity-oriented or debt-equity oriented.
A capital market is known as equity-oriented when organizations turn to the stock market as their main source of capital.
While, a capital market is known as debt-oriented when companies depend on bank financing as their primary source of capital.
The degree of development and orientation of capital markets whether debt or equity has a significant effect both in substance and form or financial reporting.
Globalization impacts financial reporting. Accounting has to keep up with drafting new accounting rules for financial instruments.
The globalization of capital markets intensified the need to harmonize financial reporting requirements.
Along with the internalization of markets and international business dealings and globalization of capital markets, there's a need of global standardization of accounting and auditing standards and practices.
No comments:
Post a Comment