An-Najah National University

Accounting department

International Accounting
Assignment 2:
Test Nobes and Doupnik & Salter studies
By:
Mohammad Bilal Wahid Arafat
11822486
Summer Semester 2022-2023
For:
Dr.Mouaz Alia

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Table of contents

Subject Page #
Introduction 3
Nopes study: Methodology 4
Nopes study: How other studies effected with this study 4
Nopes study: Results 5
Doupnik and Salter study: Methodology 6
Doupnik and Salter study: How other studies effected
with this study 7
Doupnik and Salter study: Results 7
Conclusion (Findings) 8

Illsutration 1: Diversity

Source: Flaticon

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Introduction

Accounting has gone through many stages during its history, where each stage had different
accounting needs, and the issue of accounting with a child with each of those stages, but with the
passage of time there has become a diversity of accounting due to several different factors,
including culture and the nature of the environment in which it arose, political and economic
factors, and other reasons, The aim of this study is to evaluate two studies, the first is the Nopes
(1983) study and the second is the Stephen and Timothy study (1993). Results are achieved
from such sources after information has been gathered from a variety of studies, research,
journals, and other sources. Global governments can benefit from this study. It is also intended
to inform users of financial statements, organizations that establish accounting standards, and
judicial bodies that create accounting laws about the scope of accounting variety and where it
originates. For those who study accounting, it is also helpful.

The objectives of dividing accounting practices and standards into Clusters

The main motives behind the classification of accounting systems are Al-Bahisi (2002):
1- There is an urgent need to know and test the nature and importance of similarities and
differences between countries.
2- The classification contributes to the development of accounting by contributing to defining the
differences between countries and helping a particular country to choose the best available
systems.
3- The classification provides a valuable educational tool that teachers use to identify the main
countries in each of the groups, in the light of which the characteristics of each group are
determined.
4 It provides a guide for those who undertake professional accounting regulation that may help
them identify the accounting systems of similar countries, which helps them not only to
overcome the problems they face, but also to Also try to avoid these problems before they
happen.

Research methodology
First, we will divide this research into two parts. The first section talks about the research of
Nopes, so that we first mention a general definition of the study and how it reached its results.
Then secondly, we talk about what other studies said about this study, and we conclude with a
conclusion in which we try to analyze the results. Another section is specific to the study of
Stephen and Timothy and then previous three steps apply.

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Part 1: Nopes study

Nopes methodology
At first, many studies for example Nair and Frank (1980) used the Price Waterhouse surveys for
the years 1973, 1975, and 1979. By returning to the results of these studies about accounting
diversity between countries and other studies explain accounting diversity, Nopes found that
Price waterhouse advice had a problem in collecting data. To solve this objection, Nobbs
compared the results obtained. It was advised by Price Waterhouse and between what the studies
find about the legal, economic and political differences between countries, which concluded that
the studies of Price Waterhouse have a defect in data collection, so Nobbs worked on finding
different variables to measure the differences between the accounting systems, and he found nine
main variables he found appropriate as it chose only 14 developed countries because of the ease
of obtaining information and the quality of transparency and because these countries contain a
large number of companies registered in the stock exchanges and these are as in table 1 the
variables that Nopes used to measure the accounting difference between countries.

Table 1: Nopes Variables to measure accounting differences

(USER) The number of categories of users of the financial statements
(LAW) Are the tax laws detailed and there is no Judgement
(TAX) Tax laws are separate or not
(PRU) conservatism or not
(HC) Strict application of historical cost
(RC) Usability of replacement cost
(CONS) The possibility of consilidation
(PROV) Ability to be generous with provisions (as opposed to reserves) and to smooth
income
(UNI) Uniformation of accounting laws between companies
Reference: I developed this table depending on Nopes study.

How other studies effected with this study?

*. Doupnik and salter (1993) said That Nobes study included a small number of countries, in
addition to that, these countries are developed countries only, and most of them are
European countries.
*. Shoental (1989) did a discriminant analysis and survey questionnaire on the characteristics of
those qualified in the field of accounting.

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*. Then Gernon and Bindon (1992) evaluate grays (mentioned in the book) study (1988) in
Europe.
*. Then Linz and Jarne did a multidimensional analysis, cluster analysis, and correlation analysis
elements of the surrounding environment.

The analysis of Nobes study(results)

Illustration 1: Nobes’s Judgmental Classification of Financial Reporting Systems

Source: International accounting (2009) Timothy S. Doupnik, M. H. B. Perera

By looking at the nine variables and the 14 developed countries, we find that in the first stage
they were divided into two types of countries. The first type is macro uniforms, and this means
that the countries that were classified within this type have the following characteristics, with
regard to the financial statements, they are not important in this type of country in Mostly,
because these countries are closer to being code countries as well as with regard to laws, the laws
in these countries are often detailed. As for taxes, the tax income is often equal to the accounting
income in this type of country, and some variables such as reservation and replacement cost did
not have no importance in the first stage of division.
As for the second section of the countries, it was called micro-based, and these countries were
classified like this, and most of their countries speak English. These countries are distinguished

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by the following characteristics regarding the law. The law in it is not detailed, and the tax is
very important in this type of country. There are also many users of the financial statements,
whether individuals or companies, banks and others.
The second stage of the division in this stage, the macro-uniform countries were divided into two
types: economies government, and the second type is a legal tax government. economies
government when governments try to get an ideal life for citizens. The second type in this second
stage of division is called the government tax legal, as in this type of country accounting is closer
to the laws, including taxes, and this type includes six countries, which brought them together,
and the establishments are obligated to achieve the general goals of the state. High guidance and
control over the establishments. We are still in the second phase, when micro-based were divided
into two main types. The first type is taken from accounting practice and the second type is taken
from accounting theory. In these two types, accounting serves users of financial statements,
especially investors.
The third stage of the division divided the type that appeared in the second stage, which is the
government tax legal, into two types, low-based and Tax based. In the first type, accounting
reflects laws in general, including taxes. As for the second type, accounting reflects tax laws
specifically. Here, the importance of the variable that we see in table 1, which is Tax variable.
The second division that appeared in the third stage is the division of accounting derived from
the practice that appeared in the second stage into two main types. UK influence it is clear that
they were former colonies of Britain, which created similarities in accounting standards between
the two countries and US influence which get the characteristics of US practices.
Final remarks about this division, we see that in it the accountant based on this accounting
theory, the Netherlands appears alone because it uses the replacement cost, and here the effect of
the variable on the replacement cost appears, another note, and that this division did not make the
area or the extent of the similarity between the Netherlands and the United States on the one
hand and between the Netherlands and Britain two concepts That is, we cannot be certain
through this analysis which of them is closer to each other.

Part 2 Doupnik and Salter study

Doupnik and Salter study methodology

Through the PW survey of 1979 and using data for 50 countries and following only 114 standard
elements out of 267 that PW used to avoid overwhelming important matters with trivial matters
and to prevent repetition, the most important of which is the disclosure of earnings per share or
the disclosure of earnings per share and how it is calculated, then ANOVA analysis was used At
the level of 5%, the practices that were collected were about the actual practices and not the
supposed practices. Some countries were excluded in which there were problems in data
collection. Some countries were excluded for other reasons. Many statistical methods were used,
and in the end a group of clusters was reached to interpret accounting trends. The difference
between countries, however, did not mention in his report what was the reason why each group
of countries formed a cluster.

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How other studies effected by this study?
*. d’Arcy (2001) finds that There is a very large and exaggerated exaggeration in the differences
between the United States and Britain, and this is due to the great experience of researchers in
these two accounting systems.
*. By using the Doupnik and Salter (1993) research's clustering findings to operationalize the
accounting diversity variable, a study uses the findings of this study to measure the relative
disclosure burdens of the markets (Flanigan, et al, 1999).

The analysis of study(results)

Illustration 2: Doupnik and Salter Classification of Financial Reporting Systems

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Source: Doupnik, T. S., & Salter, S. B. (1993). An empirical test of a judgemental international
classification of financial reporting practices. Journal of international business studies, 24, 41-
60.

The following explains Illustration 2:

*. In comparison with the classification of nobes, we see that the first cluster in Dubank includes
all the five cluster countries of Nobes, so this group is the same as that group, but it also included
the Netherlands, because the replacement cost was not used as a variable. Also, South Africa it
was under Dutch and British colonialism and that is the reason it is here.
*. For the second group, we see Canada and the United States, which was the number four
cluster for nobes. We also see Israel and Bermuda, and the reason for that is the political and
economic relations between Israel, Bermuda and the United States.
*. In the third cluster, we see Costa Rica on its own. It is considered a micro country, but it came
alone here, perhaps because of a certain difference, for example, a unique political system or
something like that. I cannot specify.

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*. The fourth cluster includes the American country sauce countries, namely Argentina, Brazil,
Chile and Mexico. These countries are considered Latin countries and have suffered, and some
of them are still suffering from inflation.
*. The Fifth Cluster It includes the third cluster of nopes in Spain, Belgium, France and Italy, and
it also lasts for other countries. The similarity between them is that they follow a similar tax
system.
*. The sixth cluster includes Arab countries and countries, which are macro countries. Perhaps
the reason they are one group, although there are in Arabic and non-Arab and non-Islamic
countries, is the existence of a common history and culture.
*. The seventh cluster has two countries, Finland and Sweden. These are two individualism
countries that care about the official to the social responsibility, and therefore the accounting in it
serves the state's policies and the long-term plans that the government is putting in place, which
made them together in one group.
*. The eighth and ninth clusters in the countries of Germany and Japan were these two countries,
but they are micro countries, but Dounpik has two macro countries. Perhaps there is an error in
collecting the data, and the reason that made them in two groups and not one group may be that
Germany was more advanced than Japan at that time.

Conclusion
During the review of the two studies, it became clear to us the way in which the accounting
classification is developed in the accounting systems around the world, and we found that the
accounting systems differ among themselves for logical reasons such as culture, law, and other
matters and variables that we discussed in this research, in summary, accounting diversity is a
complicated topic with benefits and drawbacks. Customization and relevance to regional settings
are made possible, but transparency and comparability issues are also raised. To achieve high-
quality financial reporting and preserve investor trust in the global marketplace, it is essential to
strike the correct balance between local adaptation and global convergence. In order to promote
better convergence and harmonization of accounting standards, it is important to take into
consideration the genuine variety of the economic, legal, and cultural environments.

References
Nobes, C. W. (1983). A judgmental international classification of financial reporting practices.
Journal of Business Finance & Accounting, 10(1), 1-19.

Doupnik, T. S., & Salter, S. B. (1993). An empirical test of a judgemental international

classification of financial reporting practices. Journal of international business studies, 24, 41-
60.

Al-Bahisi, E. (2002).Measuring diversity in international accounting systems - a literature

review. Journal of the Islamic University (Human Studies Series). Volume Fourteen, Issue One,
pg. 179: -212

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Shoental, E. R. (1989): Classification of accounting systems using competencies as
discriminating variable: a great Britain- United study. Journal of Business, Finance and
Accounting, Autumn, pp. 549-563.

d’Arcy, A. (2001). Accounting classification and the international harmonisation debate—an

empirical investigation. Accounting, organizations and society, 26(4-5), 327-349.

Flanigan, M. A., Tondkar, R. H., & Andrews, R. L. (1999). An empirical investigation of factors
affecting the selection of markets for foreign bond issues. The International Journal of
Accounting, 34(1), 71-92.

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