GoingGlobal 183Kingdom’s prime minister, and Robert E. Rubin, then U.S. treasury
secretary, intoned that developing and implementing international
accounting standards is a key part of the emerging global financial
system.
The SEC argues that international accounting standards must
be comprehensive, produce comparability and transparency, provide
for full disclosure, and be amenable to rigorous interpretation and
application. Indeed, many view SEC Chairman Levitt’s broad-based
initiative to crac kdown on earnings abuses by management in U.S.
corporations as a response to the increasing attractiveness of inter-
national harmonization of accounting standards, which the SEC
wants the United States to lead rather than follow.
The future state of accounting is crucial to investors. As pliable
as accounting rules are in the United States, they remain a func-
tional way to measure business reality. Coupled with an auditing
culture that insists on the integrity of financial reporting, this system
adds unparalleled value to the investing enterprise. Investors looking
abroad should be aware of the differences and monitor improve-
ments worldwide as they pose both pitfalls and opportunities.
Governance
In Europe, periodic resistance flares up against unification efforts.
For example, 13 EU directives dealing with European company law,
as well as a proposal to create a European Corporation (Societas
Europaea) that would supplement but not substitute for the national
corporate form in individual states, were intended to promote re-
gional (if not global) harmonization. However, none of these mea-
sures is currently among the EU’s highest priorities.
On a few occasions, particularly during early EU convergence
efforts, proposals for employee board representation derailed the
adoption of some integrated governance proposals. Much of this re-
sistance originated in the United Kingdom, which has for decades
debated whether its future will be served better by a U.S./U.K. al-
liance or a Continental European EU alliance. Despite the obstacles
this uncertainty poses for EU harmony, the United Kingdom pro-
duced domestic convergence by drawing on both models.
U.S. corporate governance originally drew upon and refined U.K.
traditions. Now the United Kingdom has in turn imported those
principles as refined. Its 1992 Cadbury Report on corporate gover-
nance (renamed the Hampel Report in the final 1998 version) seeks