Different Approaches to Corporate Reporting Regulation: How Jurisdictions Differ and Why

Award Winner: 
Winner of the 2011 Allen & Overy Law Prize (Best paper in the Law Working Paper series)

Different Approaches to Corporate Reporting Regulation: How Jurisdictions Differ and Why

Christian Leuz

Series number :

Serial Number: 

Date posted :

May 01 2010

Last revised :

May 11 2010
SSRN Share


  • Accounting • 
  • regulation • 
  • IFRS • 
  • U.S. GAAP • 
  • SEC • 
  • Standard setting • 
  • mandatory disclosure • 
  • political economy

This paper discusses differences in countries’ approaches to reporting regulation and explores the reasons why they exist in the first place as well as why they are likely to persist. I first delineate various regulatory choices and discuss the tradeoffs associated with these choices. I also provide a framework that can explain differences in corporate reporting regulation.

Next, I present descriptive and stylized evidence on regulatory and institutional differences across countries. There are robust institutional clusters around the world. I discuss that these clusters are likely to persist given the complementarities among countries’ institutions. An important implication of this finding is that reporting practices are unlikely to converge globally, despite efforts to harmonize reporting standards. Convergence of reporting practices is also unlikely due to persistent enforcement differences around the world. Given an ostensibly strong demand for convergence in reporting practices for globally operating firms, I propose a different way forward that does not require convergence of reporting regulation and enforcement across countries. The idea is to create a “Global Player Segment” (GPS), in which member firms play by the same reporting rules and face the same enforcement. Such a segment could be created and administered by a supra-national body like IOSCO.