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Accounting in a Country : The Case of Pakistan

  • Junaid Ashraf

    (LUMS)

  • Waqar I. Ghani
Registered author(s):

    Our paper examines the origins, growth, and the development of accounting practices and disclosures in Pakistan and the factors that influenced them. We traced the early days of accounting in the Indian subcontinent and the British colonial influence over the accounting of newly independent State. We examined the development of accounting through three eras : 1) Independence through 1971, 2) Post 1971 1984, and 3) 1984 to the present. We described how the colonial past and later the international financial institutions such as the Asian Development Bank and the International Monetary Fund played a key role in shaping accounting and reporting practices of the country. Pakistans adoption of International Financial Reporting Standards as national standards in 1985 did not lead to improvement in the quality of financial reporting. Pakistan, though classified as a common law country in literature exhibits most of the properties of code law countries. We argue that lack of investor protection (e.g., minority rights protection, insidertrading protection), judicial inefficiencies, and weak enforcement mechanisms are more critical factors than are cultural factors in explaining the state of accounting in Pakistan. We conclude that it is the enforcement mechanisms that are paramount in improving the quality of accounting in developing economies.

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    File URL: http://130.56.61.71/node/22246
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    Paper provided by East Asian Bureau of Economic Research in its series Macroeconomics Working Papers with number 22246.

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    Date of creation: Jan 2005
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    Handle: RePEc:eab:macroe:22246
    Contact details of provider: Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200
    Web page: http://www.eaber.org

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    1. Ball, Ray & Kothari, S. P. & Robin, Ashok, 2000. "The effect of international institutional factors on properties of accounting earnings," Journal of Accounting and Economics, Elsevier, vol. 29(1), pages 1-51, February.
    2. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," NBER Working Papers 5661, National Bureau of Economic Research, Inc.
    3. La Porta, Rafael & Lopez-de-Silanes, Florencio & Schleifer, Andrei & Vishny, Robert, 2001. "Investor Protection and Corporate Governance," Working Paper Series rwp01-017, Harvard University, John F. Kennedy School of Government.
    4. Christian Leuz, 2003. "IAS Versus U.S. GAAP: Information Asymmetry-Based Evidence from Germany's New Market," Journal of Accounting Research, Wiley Blackwell, vol. 41(3), pages 445-472, 06.
    5. Ole-Kristian Hope, 2003. "Disclosure Practices, Enforcement of Accounting Standards, and Analysts' Forecast Accuracy: An International Study," Journal of Accounting Research, Wiley Blackwell, vol. 41(2), pages 235-272, 05.
    6. Ball, Ray & Kothari, S. P. & Robin, Ashok, 2000. "Corrigendum to "The effect of international institutional factors on properties of accounting earnings"; [Journal of Accounting and Economics 29 (2000) 1-51]," Journal of Accounting and Economics, Elsevier, vol. 30(2), pages 241-241, October.
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