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Publius: The Journal of Federalism Advance Access published online on October 30, 2009
Publius: The Journal of Federalism, doi:10.1093/publius/pjp025
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© The Author 2009. Published by Oxford University Press on behalf of CSF Associates: Publius, Inc. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org.

EU Federalism and the Governance of Financial Reporting

Jochen Zimmermann*
*University of Bremen, jzimmermann{at}uni-bremen.de

The European Union (EU) is built on the federalist principle of subsidiarity, which we consider in the policy field of financial reporting. We attempt to answer the question, whether the current accounting regulation in Europe is sensibly balanced between centralized and decentralized decision making. Drawing on comparative accounting research to identify criteria for "local preferences," we conclude that local solutions currently remain preferable for small and medium-sized companies. For them, a centralized solution would result in additional costs for at least some member states and their residents. Large international firms, in contrast, face an increasingly integrated capital market and rather need a central solution as currently implemented by the EU. However, recent developments in corporate finance may align local preferences on accountancy in the future.


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