Germany

Financial accounting in Germany has been traditionally characterized as strongly creditor-oriented and conservative, as well as linked to tax law, and consequently lacking in information value for investors (Haller, 2003; Leuz & Wu ̈stemann, 2003). While this characterization may still be relevant, it does not fully describe the current German approach to financial reporting, which, in light of the legislative changes that have taken place over the last two decades, has moved the country somewhere on a spectrum between the traditional Continental European model of accounting and the Anglo- American model of accounting (Hellmann et al., 2013). Specifically, the changes have led to a complex situation, with at least two parallel financial accounting systems. On the one side, the German Generally Accepted Accounting Principles (German GAAP) are primarily codified in the German Commercial Code (Handelsgesetzbuch or HGB) and are used by all legal entities in their single financial statements. On the other side, the International Financial Reporting Standards (hereafter IFRS) must be used by publicly traded firms in their group financial statements (according to the EU/IAS Regulation of 2002).