297 research outputs found
Does accounting treatment of share-based payments impact performance measures for banks?
This paper identifies, evaluates and analyses the resulting impact of mandatory expensing of shareâbased compensation (SBC) under IFRS2/FASB123R on a set of widely used performance measures in the EU and US banking industry. The paper shows that the accounting treatment of SBC schemes, following the mandatory adoption of IFRS2/FAS123R, has a statistically significant negative impact on the selected performance measures over the period 2004â11. The impact also seems to be material, yet modest, for US banks and only for large and highâgrowth EU banks, indicating that earlier public concerns and criticisms of the implementation of IFRS2/FAS123R are largely unsubstantiated. The findings also show that banks continue to use SBC, but there is a reduction, albeit insignificant, in the recognised SBC expense over the period 2009â11. That is, earlier public concerns that firms would curtail employing SBC in their employeesâ compensation schemes to avoid the effect of SBC expense recognition on their financial ratios came to light after the first option lifeâcycle in the postâadoption period was over. The findings also show a marked movement towards using cashâsettledâbased payments, possibly due to their manipulative accounting treatment, a potentially interesting issue for related accounting research and accounting standard setters
The effect of audit committee characteristics on intellectual capital disclosure
This paper, using data from 100 UK listed firms, investigates the relationship between audit committee characteristics and intellectual capital (IC) disclosure. We find that IC disclosure is positively associated with audit committee characteristics of size and frequency of meetings, and negatively associated with audit committee directorsâ shareholding. We find no significant relationship between IC disclosure and audit committee independence and financial expertise. We also observe variations in the association between audit committee characteristics and IC disclosure at its component level, which suggest that the underlying factors that drive various forms of IC disclosure, i.e. human capital, structural capital and relational capital, are different. These results have important implications for policy-makers who have a responsibility to ensure that shareholders are protected by prescribing appropriate corporate governance structures and accounting regulations/guidelines
On the relevance of earnings components in valuation and forecasting
Pre-print also submitted to SSRN Archive. The final publication is available at Springer via http://dx.doi.org/ 10.1007/s11156-013-0347-yThis paper articulates the links between relevance of an earnings component in forecasting (abnormal) earnings and its relevance in valuation in a nonlinear framework. The analysis shows that forecasting relevance does not imply valuation relevance even though valuation irrelevance is implied by forecasting irrelevance. Firstly, I consider an accounting information system where earnings components "add up" to a fully informative earnings number. Secondly, I analyze two accounting systems where a "core" earnings component is the relevant earnings construct for valuation and the second earnings component is irrelevant but may be predictable and relevant in forecasting other accounting items. I find that dividend displacement effect on earnings and the dynamics of individual earnings components are critical in this analysis
Statement of Financial Accounting Standards No. 140
Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (a replacement of FASB Statement No. 125
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