| In Germany, a holding company has to publish both company and group accounts, the former still being prepared under German GAAP. A reason for this stipulation may be that outsiders are not sufficiently protected when only group accounts, the reports of the economic entity, are required. Group accounts only provide "informational protection" by means of disclosure. The German legislator additionally emphasises the concept of "capital protection", and sees this being served by the preparation and disclosure of company accounts based on local GAAP. Using a large number of accounting properties metrics, which are connected to either "informational" or "capital protection", we show that group accounts fulfil both these objectives better. Thus group accounts seem sufficient for outsider protection, and the particular role of company accounts based on German GAAP is overemphasized. Robustness checks do not affect these findings. |
Goncharov, Igor
Werner, Jörg R.
Zimmermann, Jochen
2006
in: SSRN Working Paper
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