The role of accounting in the German financial system

  • This chapter analyzes the role of financial accounting in the German financial system. It starts from the common perception that German accounting is rather "uninformative". This characterization is appropriate from the perspective of an arm´s length or outside investor and when confined to the financial statements per se. But it is no longer accurate when a broader perspective is adopted. The German accounting system exhibits several arrangements that privately communicate information to insiders, notably the supervisory board. Due to these features, the key financing and contracting parties seem reasonably well informed. The same cannot be said about outside investors relying primarily on public disclosure. A descriptive analysis of the main elements of the Germany system and a survey of extant empirical accounting research generally support these arguments.

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Author:Christian LeuzORCiDGND, Jens Wüstemann
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2003,16
Series (Serial Number):CFS working paper series (2003, 16)
Place of publication:Frankfurt am Main
Document Type:Working Paper
Year of Completion:2003
Year of first Publication:2003
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2005/06/13
Tag:Accounting; Disclosure; Germany; Standards; Survey
GND Keyword:Deutschland; Bilanzrecht; Außerbilanzielles Geschäft; Bankbilanz; Informationsgehalt; Informationswert; Kreditwesen
Issue:Version June 2003
Page Number:51
Draft of Chapter 14 of the book "The German Financial System", edited by Jan P. Krahnen and Reinhard H. Schmidt, forthcoming with Oxford University Press, London 2003.
Institutes:Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht