B.S. (Bachelor of Science)
Department of Accountancy
As an investor, you have an opportunity to invest in a second-tier Japanese firm. Routinely, you analyze the price/earnings ratio and discover that it is dramatically higher than that of an otherwise comparable United States company. Superficially, you surmise that the investment opportunity in the Japanese firm must be advantageous. However, with deeper investigation, questions regarding Japan's economic and accounting policies shed doubt on the investment. For example, is the price/earnings ratio higher because the cost of funds in Japan is lower? Is it because real prices charged to Japanese customers are higher than those charged to non-Japanese customers in overseas markets which result in higher profit margins? Or is it due to an accounting distortion, and, if so, which of the two markets -- U.S., Japan or both -- has the distortion? ...
Vida, Renee J., "The International Accounting Standards Committee : accounting in international proportions" (1991). Honors Capstones. 1223.
Northern Illinois University
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The IASC : accounting in international proportions