The New European Directive and the Balance between Users and Preparers

This paper analyzes the complex panorama of opinions and expectation expressed by constituents of different classes and accounting systems on key regulatory issues with reference to the review of the European Accounting Directives, and explores the role of the users’ primacy principle in EU standard setting. The European Union (EU) project to modernize and simplify Accounting Directives, which led to a public consultation in 2009 and resulted in the new European Accounting Directive in 2013, offers a unique opportunity to explore the under-researched but extremely relevant EU accounting standard setting. The results indicate significant differences in respondents’ views on choices related to reduction in mandatory information and to differential reporting. In particular, users, accounting professionals, and preparers express different orientations concerning possible reductions in mandatory information, while constituents from different accounting systems have differing views on differential reporting issues. The new Directive thus seems to be inspired by the primacy of users’ views with regard to reduction in mandatory information (in contrast to preparers’ expectations), but not with reference to differential reporting issues. This study adds to the literature by focusing on the European standard setting, which few studies have examined, by offering theoretical and public policy implications, and providing a basis for further research