International Accounting Diversity and Business Decisions: UK Multinational Companies with Chinese Joint Ventures

The paper investigates the question of whether diversity between national accounting and disclosure practices and regulations affect the business decisions of major foreign users of financial statements. The study focuses on the use by United Kingdom multinational companies (MNCs) of Chinese joint venture financial statements. Of the 100 largest UK MNCs, nine are involved in joint venture businesses in China. Questionnaires, together with interviews, were used to collect data about UK MNCs. The main conclusions, subject to the inherent limitations of the study, are that: 1) most UK MNCs in the sample rely heavily on the financial statements of Chinese joint ventures in making business decisions; and 2) accounting differences do affect UK MNC's decisions, particularly in determining the value of existing joint ventures.