Accounting and the welfare-state: The missing link

In recent years, accounting regulation has been internationalized with the extensive use and adoption of International Financial Reporting Standards (IFRS) by nation-states, which points at least to a formal convergence between accounting regulatory systems. However, major differences between national accounting systems persist. In this paper, it is argued that a country's accounting system is influenced by the type of the welfare-state. This allows us to see accounting in a broader social perspective. The societal attitudes influencing the accounting system are captured by using the Esping-Andersen (1990) classification of welfare states. To show that there is a connection between the typology of welfare-states and the way in which various corporate constituencies' interests are balanced, we compare Germany as an example of a conservative welfare-state and the UK as an example of a liberal welfare-state. This comparison shows that the type of welfare state exerts an influence on the system of accounting and, therefore, can be seen as an explanatory variable for persisting differences between accounting regulatory systems.