The finance and accounting market

Name of Student: Severine Dalsanto

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Finance environment in France. 2

The economic, legal, technological and social environment of finance in France. 2

Accounting environment. 3

Technological environment. 5

The role of IFRS standards on French firms. 5

References. 7

Durieux, G. (1995)French financial markets, Cambridge: Woodhead Publishing Ltd. 7

Finance environment in France

The financial environment in France today is a favorable one, thanks to strict regulatory mechanisms that have been put in place by Autorite des Marches Financiers. This body acts as the recognized securities regulator in the country. This autonomous regulatory body is responsible for ensuring that facilitating an environment whereby the best interests of French investors are guaranteed. The body does this by maintaining orderly financial markets, providing investors with crucial market information and safeguarding investments.


Financial information is made available by Autorite des Marches Financiers through publications, fact-sheets, official website and information booklets. Euronext Paris is the country’s securities market. Here, options and features are traded on interest rate products. There are three subcategories of the French Equity markets: The Premier Marche, The Second Marche, and The Nouveau Marche. The Premier Marche includes leading French multinational companies. It is concerned with the issuance of bonds.  The Second Marche is tasked with the role of enlisting medium companies. on the other hand, The Nouveau Marche enlists those companies that have been recently established and are developing rapidly.

The economic, legal, technological and social environment of finance in France

The financial markets in France have lately become extremely efficient, thanks to the increased use of the internet and the corresponding e-commerce strategies (Durieux, 1995). The key players in the financial sector are both local and international investors. The political, legal and social environment has been facilitative of the new strategies. Politically, the membership of France in the EU represents a sense of political certainty and free trade within the  European market.

Cross country differences in the legal environment do not have an enormous impact on the investors who operate in both France and other EU countries. This is because the EU is a free-market zone and many legislations relating to the financial markets are uniform here. Therefore certain basic financial issues such as rights of creditors do not pose serious legal difficulties for French investors. This may explain the reason why there are many better-developed banks in France as well as other EU countries. Particularly, the association between a favorable legal environment and the development of banking has become apparent since the formation of the EU. Other areas where positive development has been associated with an effective legal framework include capital accumulation, productivity growth, and economic growth.

Accounting environment

Accounting is a source of valuable information to people who have to make decisions involving business. Knowledge of today’s business in France is essential for potential investors as well as people who have already established businesses in this European Union (EU) country. In recent years, the accounting environment in France has changed in many ways. The environment has been changing in tune with the changes that are taking in the accounting standards used.

International accounting standards have found their way into many EU countries such as France. The international accounting standards that were introduced in the 1960s have reached their zenith today. This point was clearly highlighted then the European Council of Ministers voted to pass a resolution that requires all EU companies to prepare their accounts according to these standards. Emphasis was on those companies that are listed in the regulated market. The companies were required to introduce the international accounting standards on or before January 1, 2005.

The requirements were met with furor in this profession and corporate boardrooms. The resolution was welcomed by the International Accounting Standards Board, which was pleased that the EU was the first ‘non-state actor’ to embrace the new accounting standards.

The new accounting standards could be of economic, financial, economic and political benefits (Levine, 1998). According to preliminary evidence, companies, investors and lenders would prefer domestic financial reporting standards to merge with these international standards in order to create a coherent, high-quality financial reporting system.

However, the new standards are faced with many challenges relating to development and authoritative development (Ding, 2009). The challenges are brought about by cultural and social values; business activities; political and legal systems and economic conditions. Other contributing factors include standard-setting processes, cooperative efforts by nations, capital markets and forms of ownership.

Meanwhile, the new accounting standards were introduced in France at a time when information technology was becoming deeply rooted in the country. Over the last decade, many accounting packages have been developed in line with the development of international accounting standards together with information technology. These changes have changed the way in which a professional accountant conducts his daily activities. Technological developments have facilitated the development and embracement of the new accounting standards in France as well as other EU countries.

Technological environment

Because of the rapidity of Internet use and electronic commerce, the average professional accountant in France has to be open to international regulations that require him to succeed in client follow-up. Many registered companies that operate in France have international networks. The use of credit cards and other bank cards has revolutionized the manner in which financial transactions are carried out in France. This has resulted in many benefits although sometimes new challenges tend to crop up. Most of these challenges are of social and economic nature. Politically, France is a stable country. Major instabilities occur rarely and whenever they do, the trigger normally originates in the international market.

The role of IFRS standards on French firms

The international financial reporting standards (IFRS) have played an extremely critical role in the French corporate sector (Cazavan-Jeny & Jeanjean, 2007). According to the 2008 EC report on how the new financial reporting standards would be implemented, unlisted corporate entities are also accorded permission to apply for IFRS in all their consolidated financial statements. However, IFRS is not permitted for use by accountants who are preparing annual accounts, in which they are required to apply the French accounting standards.

The main problem with France’s finance and accounting environment is that the convergence policy as it entails to the internationalization of standards has been selective. The IFRS standards have not been adopted in all areas within the country’s financial environment. According to a self-assessment done by the National Organization of Registered Auditors (CNCC), the application of the standards may remain that way until all tax and legal issues that arise from the application of the international standards are resolved. More recently, it was reiterated in the 2009 CNCC Action Plan that the new accounting standard-setter would continue to pursue convergence efforts while taking into consideration the problems caused by the French legal and tax environment.


To facilitate comparability between various financial statements, the IFRS requires all first-time adopters to present comparative financial statements of at least the last year. The statements have to be adjusted in order to ensure that they are fully compliant with IFRS. However, whereas some adjustments are mandatory, others are optional. In France, the stability of the new standards arises out of the choices that accounting firms have. These firms make the best use of these choices by offsetting the effects of various mandatory adjustments. French firms have developed a tendency of using optional exemptions in order to minimize the existing gap between equity under IFRS and equity under French accounting standards.

In conclusion, France has a highly developed finance and accounting system. The introduction of information technology has made IFRS even more efficient than before. The French finance and accounting environment also benefits from the country’s membership in the EU. Many economic structures that are in place in France are similar to those that exist in other EU countries. This eliminates legal, social, economic, political and technological hurdles especially for investors who come from within the EU market. However, the implementation of IFRS in France continues to face challenges because of legal and tax-related issues of incompatibility with domestic financial reporting standards.


Cazavan-Jeny, A. & Jeanjean, T. (2007) Accounting choices under IFRS 1: Analysis and determinantsAccounting in Europe,3rd Annual workshop, 12/13 September 2007

Ding, Y. (2009) Observations on measuring the differences between domestic accounting standards and IAS: A reply, Journal of Accounting and Public Policy, 28(2), 154-161

Durieux, G. (1995)French financial markets, Cambridge: Woodhead Publishing Ltd.

Levine, R. (1998) The Legal Environment, Banks and Long-Run Economic Growth

Journal of Money, Credit & Banking, 30(3),23-75

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