Accounting for the recognition of information as an asset

Tangible assets as property, plant and equipment continue to be important factors in the production of both goods and services. However, their relative importance has decreased through time as the importance of intangible, knowledge-based assets has increased. This shift in importance has raised a number of accounting questions critical for recognizing the information as an asset in nowadays financial statements. Attempts to recognize “information” as an asset in the financial statements has lead to an increased awareness of why these invisible valuable recourses are not yet recognized. This paper aims to develop a model based on a three-circled set of criteria for the pre-measurement phase of an asset recognition process. This model should be applicable to all types of assets but we mainly focus on information as an intangible based asset. The three-circled set of asset recognition criteria presented in this paper breaks free from the narrow definitional and rule based perspective of accounting epistemology to offer an alternative view based on the recognition of artefacts

Analysis of International Accounting Regulations with Regards to Fair Value

Unifying the economical-financial information at an international level represents today, within the context of the globalization and integration of the financial markets around the world, an important and urgent demand. One of the coordinates of accounting globalization is the fair value based valuation system. This tendency arises from the contents of international accounting standards and from the progress of world-wide regulating practice. The economic and market events of the past years have highlighted the importance of fair value measurements used in financial statements and have emphasized the need for consistency and comparability in those measurements in financial statements prepared around the globe.fair value, harmonization, IASB, FASB, Accounting Directive, IFRS, FAS, Exposure Draft

Extending the IS-Impact model into the higher education sector

The study addresses known limitations of what may be the most important dependent variable in Information Systems (IS) research; IS-Success or IS-Impact. The study is expected to force a deeper understanding of the broad notions of IS success and impact. The aims of the research are to: (1) enhance the robustness and minimize limitations of the IS-Impact model, and (2) introduce and operationalise a more rigorously validated IS Impact measurement model to Universities, as a reliable model for evaluating different Administrative Systems. In extending and further generalizing the IS-Impact model, the study will address contemporary validation issues

SEARCHING FOR THE FAIR STORY BEHIND FAIR VALUE FOR FINANCIAL INSTRUMENTS

Our paper aims at telling the whole story where fair value accounting is concerned. Harsh criticism has been brought to this concept under current circumstances that motivated out research. Without arguing for fair value as something it is not, we brieflyFair value accounting, standards setting bodies, financial crisis

Fair Value of Real Estate and Utility of Financial Statements of Construction Companies

Some international standards have proposed that the fair value approach should be used to evaluate real estate assets. The choice to use this method or another approach could influence the quality of the financial reports published in response to information demands by company stakeholders. In this study, we will examine whether fair value evaluation, in the real estate context, improves the utility of construction company financial reports. For this purpose, we have addressed a questionnaire to financial directors that concern the relevance, reliability and viability of this valuation criterion. Based on the opinion of the respondents, our results show that the fair value model would improve the usefulness of financial reports to evaluate company solvency, and would also improve the comparability, timeliness and understandability of such reports.

AUDITING FAIR VALUES IN A SENSITIVE SOCIO-ECONOMICAL CONTEXT

The concept of fair value was subject of many debates and disputes in recentyears. These debates have focused mainly on the relevance of the concept, but also on thepractical difficulties in determining reasonable estimates, raising particularly the interest ofpractitioners in terms of identifying the best valuation procedures and techniques,respectively auditing fair values. Determining the fair value involves a broad spectrum ofapproaches, from the simplest to the most complex and burdensome ones. In the currentsocio-economical context, market and stock volatility raises questions about fair values, evenif there are conditions for the existence of market information. The problem gets morecomplicated where fair value is determined based on cash-flows, especially where there areuncertainties about the value and timing of cash-flows and adjustment rates, and the impactof used assumptions related to future conditions, transactions and events.Last but not least, assessment of fair value is based on the going concern assumption, whichmay not be applicable in the context of an economic crisis.The International Financial Reporting Standards (IFRS) provide for financial instruments tobe measured generally at fair value. Because fair value is primarily assimilated with marketprice, its assessment requires the existence of a market able to operate under normalconditions, or in other words, sufficiently liquid to assess the price of financial instruments.And, one of the features of the current crisis consists in the significant decrease of liquiditieson the market, which in turn caused a high impairment of derivatives (those based onAmerican real estate). As American real estate can never be zero, market prices are not thereal ones. However, this situation highlights the volume of liquidities available to buyers,which is a feature of imperfect markets. But the International Financial Reporting Standardsdid not anticipate the effects of liquidities on financial instruments, as their development isbased on perfect functioning of financial markets. Under these circumstances, fair valuemeasurement started to be increasingly criticised, and the International AccountingStandards Board (IASB) has changed the rules for measurement of financial instruments atfair value.Given the high degree of volatility, auditors should ensure that valuation methods andassumptions used by management under normal conditions for determining fair values areappropriate in a sensitive socio-economical context as well, and that the valuation modelincludes also the effects of subsequent events.fair value, historical costs, fair value audit, volatility, economic crisis

The Determinants of Equity Risk and Their Forecasting Implications: A Quantile Regression Perspective

Several market and macro-level variables influence the evolution of equity risk in addition to the well-known volatility persistence. However, the impact of those covariates might change depending on the risk level, being different between low and high volatility states. By combining equity risk estimates, obtained from the Realized Range Volatility, corrected for microstructure noise and jumps, and quantile regression methods, we evaluate the forecasting implications of the equity risk determinants in different volatility states and, without distributional assumptions on the realized range innovations, we recover both the points and the conditional distribution forecasts. In addition, we analyse how the the relationships among the involved variables evolve over time, through a rolling window procedure. The results show evidence of the selected variables\u2019 relevant impacts and, particularly during periods of market stress, highlight heterogeneous effects across quantiles

"Looking behind the veil": invisible corporate intangibles, stories, structure and the contextual information content of disclosure

Purpose – This paper aims to use a grounded theory approach to reveal that corporate private disclosure content has structure and this is critical in making "invisible" intangibles in corporate value creation visible to capital market participants. Design/methodology/approach – A grounded theory approach is used to develop novel empirical patterns concerning the nature of corporate disclosure content in the form of narrative. This is further developed using literature of value creation and of narrative. Findings – Structure to content is based on common underlying value creation and narrative structures, and the use of similar categories of corporate intangibles in corporate disclosure cases. It is also based on common change or response qualities of the value creation story as well as persistence in telling the core value creation story. The disclosure is a source of information per se and also creates an informed context for capital market participants to interpret the meaning of new events in a more informed way. Research limitations/implications – These insights into the structure of private disclosure content are different to the views of relevant information content implied in public disclosure means such as in financial reports or in the demands of stock exchanges for "material" or price sensitive information. They are also different to conventional academic concepts of (capital market) value relevance. Practical implications – This analysis further develops the grounded theory insights into disclosure content and could help improve new disclosure guidance by regulators. Originality/value – The insights create many new opportunities for developing theory and enhancing public disclosure content. The paper illustrates this potential by exploring new ways of measuring the value relevance of this novel form of contextual information and associated benchmarks. This connects value creation narrative to a conventional value relevance view and could stimulate new types of market event studies

Determinants of Leverage and Agency problems

In this paper we empirically investigate the determinants of leverage and agency problems and we examine the relationships between leverage and agency problems. As in Titman and Wessels (1988) we use structural equations modeling with latent variables. In contrast to Titman and Wessels (1988), who employ data obtained from annual reports and capital markets, we use questionnaire data to measure firm characteristics. The questions concern the characteristics of the respondents’ firms, including the presence of agency problems. We estimate the relations between these characteristics. The results confirm that the trade-off between tax advantages and bankruptcy costs determines leverage. We also find free cash flow and corporate governance characteristics as determinants of overinvestment. Despite findings that agency problems are present, direct relationships between leverage and four agency problems are absent.capital structure;agency costs