The International Journal of Accounting

Book Review

International Financial Reporting and Analysis: A Casebook, by Kenneth R. Ferris,

Irwin/McGraw-Hill, Burr Ridge, Illinois, 1998.

As the author notes in the introduction, “identification of good case materials is often dif-

ficult, particularly in the international arena.” This book takes a significant step toward fill-

ing that void. It includes thirty-three financial reporting cases representing nineteen

countries and covering a broad array of material.

Several key features of the text are striking. First, it is more “global” than “international”

in the sense that the focus is not on non-U.S. reporting, but rather on taking a balanced view of reporting worldwide. This is apparent in several ways. Most obviously, several of the cases are based on U.S. reporting. For example, the E.I. DuPont de Nemours case considers

environmental liability accounting and disclosure and how it has evolved over time in a primarily US context. More substantively, the cases cover standard topics but draw on a

wide range of countries. So, for example, the LIFO inventory case is based on BASF-the

analysis is fairly standard in terms of restating the LIFO balance sheet, income statement and taxes to FIFO, but use of the German context provides helpful exposure to alternative balance sheet and income statement formats and terminology. Similarly, the Baycorp

Holdings case requires preparation of pro forma statements and pricing of an equity issue for a New Zealand company. As a consequence, the cases provide a unique opportunity to present material covered in a standard analysis class while providing a much broader

perspective.

Second, the cases are interdisciplinary and open-ended. They provide a broad range of

background material to help students think beyond the accounting and reporting issues to

the more general analysis of strategy, operations and underlying economics. Further, the questions generally include both standard quantitative analysis as well as open-ended dis- cussion questions. For example, the Buenos Aires Embotelladora (BAESA) case is an

analysis of Pepsi’s strategic investment in the Argentine bottler and of BAESA’s subse-

quent surprise announcement of financial difficulties. It begins with a general discussion of the worldwide soft drink industry and Pepsi’s strategy in the market, particularly as it

related to Latin American strategy and BAESA. Then it carefully lays out the reasons it appeared that BAESA was well situated to help Pepsi challenge Coke in the region. The questions begin with fairly standard analyses of cash flows, comparisons with competitors,

and ratios. However, they quickly turn to an analysis of the weak points in the strategy, the early warning signs, and the disadvantages BAESA faced relative to its competition. The case closes with a discussion of future directions for BAESA and for Pepsi. One leaves the

The International Journal of Accounting, Vol. 33, No. 3, pp. 391-399 ISSN: 0020-7063. All rights of reproduction in any form reserved. Copyright 0 1998 University of Illinois

392 THElNTERNATlONALJOlJRNALOFACCOUNTlNG Vol.33,No.3,1998

case with an understanding not only of the numbers, but also of the underlying economic and strategy issues.

Third, the author has managed to assemble an assortment of cases that cover a remark- able range of countries and issues. Many international texts draw primarily from the more developed economies; the cases here include companies from Argentina, Chile, India, Vietnam, Hungary, the West Indian Islands, and an array of other countries. For example, the Zoltek Companies case considers a proposed acquisition by a U.S. company of a Hun- garian manufacturing company. The case analysis requires the students to begin with a pro forma analysis of the combined companies and then focus on the foreign exchange expo- sure for the U.S. company which would result from such an acquisition and the strategies for dealing with the exposure. The case ends with a discussion of the factors that would be considered in valuing such a business, exposing students to the unique issues encountered with acquisitions in volatile economies.

Fourth, as the preceding discussion suggests, all of the cases are very current and timely. As a consequence, I have no doubt that the book would be very popular with students, since it addresses many topics they would have been exposed to in the press and in other courses.

My only concern is with how well the book would fit in the standard curriculum, given the range of topics covered. It is designed mainly “for graduate management students with prior work experience, for executives, and for advanced undergraduate students.” Several of the cases cover fairly basic concepts (e.g., accounting for liabilities, revenue recognition criteria, and preparation of a statement of cash flows) which would fit nicely into, say, an MBA introductory class. Others seem more appropriate for an upper level course after stu- dents have taken courses in strategy and finance. Many focus on a restatement to U.S. GAAP, which is probably most appropriate for an elective with an explicit international focus. As a consequence, I could imagine wanting to pull a few cases from the book for a variety of courses, but it is more difficult to envision using the book as a primary text for a

specific course.

Reviewed by Mark Lang

University of North Carolina Chapel Hill, North Carolina, USA

International Accounting and Finance Handbook, by Frederick D.S. Choi, second edi-

tion, John Wiley & Sons, New York, 1997, approximately I100 pages + index.

International Accounting and Finance Handbook, edited by Fred Choi, a distinguished professor of accounting at New York University, has now appeared in a second edition. The coverage is basically the same as in the first edition, published in 1991, although there are a number of new contributors. The main change is some rearrangement of material and the addition of some chapters dealing with international finance. As a consequence of this change, the words and Finance have been added to the title. My comments are limited to the accounting section, reflecting my background as, among other things, a Board member of the IASC, representing financial analysts.

Editing a book on international accounting is not an easy task, and especially not at this time. We have never before witnessed so many accounting changes taking place in a rela-