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INTRODUCTION
As today companies become more globally oriented and expand into multinational
corporations, there is a growing need to compress financial regulations into a
homogeneous unit. To achieve this homogeneity, accounting practices in the modern
economic market must strive for a symbiotic relationship with globalization. Because
consumer capitalism has spread to non-originating countries, and non-Americanized
cultures, the practices of accounting and financial management must standardize their
policies. Thus, accounting must be regarded beyond capital market settings, and the
different effects that accounting has had in such sites must be examined.
WHY ACCOUNTING IS CHANGING
GLOBALIZATION
Since leading companies have subsidiaries in all important market regions, globalization
has changed record keeping. Globalization is operating and investing, but also financing
(Gebhardt, 2000). The home base of most global investors is the United States, and hence,
one of the major sets of standards for accounting is the Generally Accepted Accounting
Principles (GAAP) (Nolke, 2005). However, some countries cannot interpret this format,
or they are following the International Financing Reporting Standards (IFRS), the second
major global standard (Nolke, 2005). Because accounting reports are a means of internal
communication between managers and employees all over the world stage, it would
follow, as a matter of sense, that the language of this reporting should be homogeneous and
convergent. Accounting influences goals and performance, both in the capital market
settings, and in supranational organizations (Gebhardt, 2000). Furthermore, accounting
creates social distinctions and a cross-boarder flow of more than capital (Nolke, 2005).
The movement of people and the mixing of cultures are also calculated in accounting
