(Shalin and Alan, 1999). The main differences between the two systems is in terms of reasoning and degree of complexity. The deductive approach considers a priori theory based on knowledge or beliefs of the classifier while the inductive approach infers the general from the particular. It is data driven, considers large number of countries and rules and generates categories by making use of statistcs.
Muller's classification system as cited by Gray(1998) states that the deductive approach is based on four distinct approaches to accounting development in western nations with market oriented economic systems including:
This system was extended by Nobes who adopted a structural approach to the identification of accounting practices and assessed major features including the use of conservative accounting, the importance of tax rules, the strictness of application of historical costs, the making of replacement cost adjustments, the use of consolidation techniques the generous use of provisions, and uniformity between companies in application of rules. (Shalin and Alan, 1999).
Although the deductive approach is very broad, it fails to take into consideration the effects of culture in the classification. There was also a failure in the methods used to obtain the groupings. (Shalin and Alan, 1999; Gray, 1998).
According to Roberts et al, the classification systems under the inductive approach are as follows:
Use of price water house data;
Da Costa et al's study;
Nair and Frank's Study;
Having outlined the classification systems under the inductive approach, the paper will now give a more detail discussion of Nair and frank's study.
In the inductive approach statistical analysis were carried out by Nair and Frank in which they analysed accounting practices in forty four countries using data from price water house coopers. in the course of their study, a distinction was made between measurement and disclosure practices. Five groups were identified in terms of measurement while seven groups were identified in terms of practice.
An attempt was made to study the relationship of the groups with independent variables. there was no signicant relationship between disclosure practices and culture as well as between disclosure and economic variables. there was also no significant relationship