FINANCIAL DISCLOSURE REGULATION AND ITS ENVIRONMENT - A REVIEW AND FURTHER ANALYSIS

Much of the international accounting literature assumes that accounting and financial reporting in a country is a function of its environment. This assumption is based primarily on an a priori assertion and less on empirical findings. Many researchers have argued that external factors such as cultural and colonial ties, economic spheres of influence and language are major determinants of accounting practice. Others have argued that accounting practice is a function of inherent national characteristics: the interaction between the levels of political, economic, educational, and technological development of each country. This article is concerned with environmental explanations of the level of accounting regulation across nations. While the literature provides considerable evidence for external factors, the evidence is much less clear with regard to internal factors. The article concludes that the level of corporate financial disclosure regulation in many developed countries is likely determined more by internal factors, whereas that of many developing countries is likely determined more by external factors. © 1990.