THE IMPACT OF IFRS ON REPORTING FOR BUSINESS COMBINATIONS: AN IN-DEPTH ANALYSIS USING THE TELECOMMUNICATIONS INDUSTRY

The mandatory use of IFRS by all publicly listed companies in the European Union created challenges for accounting and reporting of business combinations, goodwill impairment and disclosures for these items. Major issues are allocation of amounts to goodwill and specific intangible assets arising from acquisition. This study presents an in-depth exploration of compliance with IFRS 3 and IAS 36 using content analysis methodology of annual reports of eight European telecommunications that were chose because the industry is well known for significant acquisitions involving intangibles. The results show only partial compliance with little change over the four year period since mandatory IFRS adoption. While results cannot be generalized outside this group, the in-depth analysis yielded important insights for continued research using broader research methods.IFRS, business combinations, goodwill, content analysis, annual reports, listed companies

Market valuation of greenhouse gas emissions under a mandatory reporting regime: Evidence from the UK

This study provides evidence on the potential benefits of mandatory environmental reporting for listed firms’ market valuation. It takes advantage of recent regulation that requires all listed firms in the UK to report their annual greenhouse gas (GHG) emissions in their annual reports and shows that the magnitude of the negative association between GHG emissions and the market value of listed firms decreased after the introduction of the reporting regulation. This decline is attributed to regulation forestalling shareholders’ negative reflexive reaction toward firms’ carbon disclosures, as proposed by the theoretical work of Unerman and O’Dwyer (2007)

The valuation relevance of environmental performance revisited: The moderating role of environmental provisions

This study attempts to broaden our understanding of the value relevance of environmental performance by providing empirical evidence on the moderating role of financial environmental reporting. Previous studies find that firms' environmental performance can be both positively and negatively associated with market value. Such contradictory findings can be attributed to the fact that environmental performance is associated with future economic benefits and costs. This study suggests that firms with recognized environmental provisions on their balance sheets enable investors to disentangle these opposite effects either by signaling strong future financial performance or by enhancing the reliability of environmental performance information. Regardless of the mechanism by which this moderation effect is invoked, it is hypothesized that capital market participants place a positive and significantly higher value on the environmental performance ratings of firms with recognized environmental provisions than on the ratings of firms without environmental provisions. Utilizing a sample of 692 firm-year observations of French listed firms and employing a linear price-level model that associates the market value of a firm's equity with its environmental performance, I provide empirical evidence to corroborate this thesis. In addition to contributing to the academic debate on the market valuation implications of environmental performance, this study intends to provide useful insights from a country that can be considered a pioneer of environmental reporting legislation; hence, it provides valuable lessons for other jurisdictions that are in the process of developing their sustainability reporting regulations. Finally, the findings of this study support the calls for more integrated reporting showing that the interaction of financial and non-financial information has market valuation implications

Social performance and social media activity in times of pandemic: evidence from COVID-19-related Twitter activity

Purpose The purpose of this study is to examine corporate disclosure of stakeholder-oriented actions on Twitter in response to COVID-19 during the pandemic outbreak and to empirically investigate whetherfirms’ social performance and their financial resilience impact on their engagement in, and communication of, stakeholder-oriented COVID-19 actions. Design/methodology/approach This study scrapes a sample of tweets communicated by major global listed firms between March 1, 2020 and April 30, 2020 and identifies disclosures that mention firm engagement in stakeholder-oriented actions in response to the COVID-19 pandemic. Cross-sectional regression analysis is used to examine the relationship between firms’ social performance and the number of tweets they post about stakeholder-oriented COVID-19 actions. Further, firms’ financial resilience is examined as a moderating factor of this relationship. Findings The results show that firms with better social performance are more likely to engage in and, hence, communicate stakeholder-oriented actions for the COVID-19 pandemic on Twitter. Moreover, it is evident that firms with better social performance communicate more stakeholder-oriented actions only when they belong to industries that have not been severely impacted by the pandemic. Originality/value This study has two important contributions. First, this study provides contemporary evidence of corporate disclosure of firms and their stakeholder-oriented actions on Twitter in response to the COVID-19 pandemic during the initial outbreak period. Second, it reveals insights into what characteristics drive firms to engage in costly corporate social responsibility (CSR) activities, and promote them on social media, in a period characterized by high economic uncertainty

Ethnic minorities, income inequalities and the COVID-19 pandemic: evidence from English local councils

This study examines the effects of ethnic minority populations and income inequalities on COVID-19 excess mortality within English local councils. We demonstrate empirically that councils with large ethnic minority populations and high-income inequalities exhibit higher excess mortality during the first wave of the pandemic. We further show that the association between a large ethnic minority population and high excess mortality is manifested significantly more in councils with larger income inequalities. Our findings call for immediate actions and long-term policies to address social and income inequalities as these inequalities affect population health conditions

Relations between corporate economic performance, environmental disclosure and greenhouse gas emissions: new insights.

This study examines the associations and causations between corporate economic performance, environmental disclosure and greenhouse gas emissions, utilising a large, longitudinal, multi-country dataset disaggregated between developed and developing countries. The methodology employs a simultaneous equation model with system estimation to deal with endogeneity between the variables, and Granger causality tests to indicate their direction of causation. A robust result is that lower emissions are strongly associated with better economic performance. After pretesting for stationarity, we find evidence of a one-way causation from emissions and environmental disclosure to economic performance, but no evidence of reverse causation. We also find strong evidence of a one-way causation from emissions to disclosure, but no evidence of reverse causation. The over-arching policy implication is that environmental performance, as measured by greenhouse gas emissions, plays a crucial role in the formulation of business strategy at firm level and government environmental policy at national and international levels

Impairment losses: the impact of the first-time adoption of the accounting standardization system In Portugal

In 2010, Portuguese unlisted companies started to apply a new accounting frame of reference called Accounting Standardisation System (Sistema de Normalização Contabilística – SNC) based on IAS/IFRS. This paper seeks to analyse the impact of SNC first-time adoption regarding the accounting treatment of impairment losses. Portugal has been recognized as a Code-law country, with weak legal enforcement mechanisms, and conservative accounting practices. However, since 2005 Portuguese companies have been changing their financial reporting practices to a common-law institutional logic. Therefore, the present research setting might provide interesting insights to confirm if the differences found are due to management interests, rather than cultural issues. Differences found are neither due to cultural issues nor management interests. To mitigate political costs associated with their public visibility, larger companies present more credible financial statements that reflect their overall true financial and economic condition. This study is a valuable contribution to both the users of financial information and domestic standard-setters entities to help them understand and improve the impact of accounting standards. Consistent with Khalil and Simon (2014), it also contributes to the debate on the optimal flexibility permitted by International Financial Reporting Standards to improve reporting quality and reduce earnings management.info:eu-repo/semantics/acceptedVersio

A novel measure of corporate carbon emission disclosure, the effect of capital expenditures and corporate governance

The UK's 2050 net-zero emission target is one of the most ambitious goals in the world. Organisations should play a vital role by communicating a sufficient level of carbon emission information with the stakeholders. Motivated by the necessity of measuring the level of carbon disclosure, this paper provides a unique carbon emission disclosure measurement based on a sample of UK firms from 2013 to 2019. We apply different methods to assess the validity and reliability of our developed measurement. The results suggest that our measurement captures the actual CO2 emission, including scope 1, scope 2, and also captures the environmental, social and governance (ESG) score. Additionally, we explore the association between capital expenditure, corporate governance and the level of carbon emission disclosure. Further, the results show a positive relationship between capital expenditure and carbon emission disclosure. Also, there is a significant positive relationship between internal governance and carbon emission disclosure. Moreover, the analysis suggests that internal governance strengthen the relationship between capital expenditure and carbon emission disclosure. We also use quantile regression, and the findings show that capital expenditure and internal governance have a positive impact on carbon emission disclosure under all quantiles. Our data suggest that capital expenditure declines within the UK by around 53% over the last six years. Following the reduction in capital expenditure, the results demonstrate 39% decline in the CO2 emission level. The results also indicate that for every $1 million capital expenditure, approximately 2.75 Metric tons of carbon dioxide (MtCO2) emissions increase. Business investment is around 70% of the UK's total investment. Therefore, the reduction in capital expenditure is one of the primary reasons that might explain the decrease in the UK's overall CO2 emission level. The unique findings of this paper are relevant to the government, management and standard-setters. bMahmoudElmarzouky

Environmental and financial performance in the European manufacturing sector: an analysis of extreme tail dependency

In this study, we investigate the impact of environmental performance on financial performance. We argue that environmental performance heterogeneously affects firms with different profitability level. Using data for 288 European manufacturing firms over the period 2005-2016, we investigate the said relationship under the financial slack argument and the contrasting paradigms of neoclassical and the instrumental stakeholder theory. Employing a quantile regression framework enriched with a set of instrumental variables to more effectively approximate environmental performance, we find (i) firms with superior environmental performance tend to be more profitable; (ii) the relationship between environmental and financial performance can be characterised as positive and heterogeneous across the conditional distribution; (iii) financial and environmental performance are endogenously related only when high profitability firms are examined