Nothing like the Enron affair could happen in France (!)

This article reviews the reactions of the French accounting profession and academia following the collapse of both Enron and Andersen. It considers the general impact on University accounting education programmes and the value of using corporate scandals in the teaching process.Enron; accounting eductation; ethics; France

Why do firms opt for Alternative-Format Financial Statements ? Some Evidence from France

Historically, the format of financial statements has varied from one country to another. Recently, due to the attractiveness of their capital markets, the strength of their accounting professions and the influence of their institutional investors, Anglo-American countries have seen the impact of their accounting practices on other nations increase steadily, even influencing the actual format of financial statements. Given that French accounting regulations allow a certain degree of choice in consolidated balance sheet format (‘by nature’ or ‘by term’) and income statement format (‘by nature’ or ‘by function’), this study examines a sample of 199 large French listed firms in an attempt to understand why some of these firms do not use the traditional French formats (‘by nature’ for the balance sheet and ‘by nature” for the income statement), instead preferring Anglo-American practices (‘by term’ format for the balance sheet and ‘by function’ format for the income statement). We first analyze the balance sheet and income statement formats separately using a logit model, then combine the two and enrich the research design with a generalized ordered logit model and a multinomial logit regression. Our results confirm that the major driving factor behind the adoption of one or two alternative formats is the firm’s degree of internationalization, not only financial (auditor type, foreign listing and the decision to apply alternative accounting standards) but also commercial (company size and the internationalization of sales).Disclosure; Determinants; Financial Statements; Alternative format; France; Logit; Generalized ordered logit; Multinomial logit

R&D Productivty: an International Study

The objective of this paper is to explore the impact of R&D expenditures on company performance. R&D activities play an essential role in the future economic development and financial performance of firms. However, with the exception of some American studies, the economic effectiveness of such investment is seldom demonstrated explicitly by the literature, and to the best of our knowledge, there are no existing studies on R&D productivity taking an international approach. Our research design is based on an earnings equation associating earnings with recorded assets, R&D expenditures and selling, general and administrative (SG&A) expenses (proxying advertising expenses). We determine a rate of return on R&D for each given sample of firms in 12 developed countries. Our results corroborate previous studies of American companies, which found that reported earnings, adjusted for the expensing of R&D, reflect realized benefits from R&D. This study confirms the positive contribution of R&D activities to future company performance, although this contribution can vary from one country to another.R&D productivity; R&D profitability; international study

Towards an understanding of the phases of goodwill accounting in four Western capitalist countries: From stakeholder model to shareholder model

The objective of this paper is to illustrate that the change in shareholders’ attitude towards firms (from stakeholder model to shareholder model) influences the accounting treatments of goodwill. This study is based on four countries (Great Britain, the United States, Germany, and France) and covers more than a century, starting in 1880. The authors explain that all these countries have gone through four identified phases of goodwill accounting, classified as (1) “static”(immediate or rapid expensing), (2) “weakened static” (write-off against equity), (3) “dynamic” (recognition with amortization over a long period) and (4) “actuarial” (recognition without amortization but with impairment if necessary).Goodwill – Accounting history – Social nature of accounting – Stakeholder/shareholder models – Corporate governance; France; Germany; Great Britain; United States

Why do you speak English (in your annual report)?

In this study the authors analyze the factors associated with the publication of an English-language annual report in non-English-speaking countries. Using a sample of 3,994 firms from 27 countries in 2003, they find that about 50% of the sample firms issue annual reports in English. Our findings suggest that the decision to publish an English annual report is related to the internationalization process (via foreign sales), language barriers (via language distance and language importance), governance (via ownership structure) and financial concerns (via the need for external financing, capital market size and cross-listing).International financial reporting; annual report; language; cost-benefit analysis; logistic regression

Income statements "by nature" and analysis of company performance : an application of US airlines companies

Since September 11, 2001; and during the ensuing economic slowdown, U.S airline companies have experienced significant financial difficulties, including bankruptcies and near bankruptcies on the part of several major carriers. In an economic setting where U.S. airlines are struggling to achieve or maintain profitability, it is important for accountants, auditors and financial analysts to be able to analyze the relative performance of airline companies. In the airline industry, income statements are normally prepared "by nature" rather than "by function". This differs from the usual presentation found in the income statements of most American companies. This case demonstrates how to perform a comparative financial statement analysis when an income statement is prepared "by nature", by applying a tool called the "Statement of Intermediate Balances". The three companies studied in this case are United Airlines, Delta Air Lines and Southwest Airlinesfinancial statement analysis; income statement format; income statement by nature; income statement by function; statement of intermediate balances

Really “Lost in translation”? The economic consequences of issuing an annual report in English

In this paper, we investigate the economic consequences of using English as an external reporting language for firms from non- English speaking countries. We use a difference-indifferences technique to estimate the effect of language. We use a sample of 166 firms that start publishing an annual report in English in addition to an annual report in their local language. We benchmark these firms to a sample of control firms defined via a propensity score matching procedure to control for endogeneity in the choice of the reporting language. We show that information asymmetry (measured as the bid-ask spread) is reduced, analyst following is enlarged and a greater investor base (measured as a higher number of foreign investors) is attracted. Our findings suggest that language per se may contribute to an increase in market efficiency by providing information accessible to more market participants.rapport annuel, conséquences économiques, traduction, anglais, fourchette de prix, suivi des analystes, actionnariat étranger, différences dans les différences, score de propension.

International differences in R&D disclosure practices : evidence in a French and Canadian context

This paper compares the R&D disclosure practices in France and Canada, as evidenced in the annual reports of 76 French and 110 Canadian listed companies. It finds that Canadian high-tech companies (hardware, software, and biotechnology) disclose significantly more information on their R&D activities than their French counterparts. It also finds a strong link between R&D intensity and R&D disclosure among Canadian high-tech companies. Canadian companies overall are also found to be more likely to use non-financial disclosure as a means to resolve any R&D information asymmetry, while French firms disclose more traditional financial and accounting information. Canadian companies are also more willing than French firms to provide information concerning their future R&D expenditures. These results are consistent with inherent cultural and capital market differences between France and Canada. In contrast, the study does not find any significant difference in R&D expenditure capitalization policies between French and Canadian firms.R&D disclosure; France; Canada

" CAPITALISATION " DES FRAIS DE R&D EN FRANCE : DETERMINANTS ET PERTINENCE

Selon les règles comptables françaises, les sociétés ont la possibilité de " capitaliser " leurs frais de R&D sous certaines conditions. En analysant les rapports annuels 2000 des sociétés non financières appartenant à l'indice SBF 250, nous avons tenté de comprendre pourquoi certaines sociétés françaises " capitalisent " leurs frais de R&D. Nos résultats montrent que les sociétés qui " capitalisent " la R&D sont celles qui sont cotées uniquement sur le marché boursier français, qui appartiennent au secteur de la haute technologie et qui ont un risque Bêta plus élevé. Nous avons également testé l'hypothèse selon laquelle la décision de " capitaliser " la R&D améliore la pertinence des chiffres comptables par rapport à la valeur de marché. Notre analyse de régression linéaire ne fournit pas de résultats probants dans ce sens. Ceci confirme les particularités dans la diffusion des informations financières sur le marché français en raison d'un modèle de gouvernement d'entreprise diffèrent de celui en vigueur dans le monde anglo-saxon.France ; R&D ; Immatériels; Capitalisation ; Pertinence des chiffres comptables

La compétence financière des conseils d'administration et de surveillance : mesure et déterminants

Cet article est consacré à la mesure et à l'analyse des déterminants de la compétence financière des conseils d'administration ou de surveillance des sociétés non financières du SBF 120. Les principaux rapports sur le gouvernement d'entreprise mettent l'accent soit sur l'indépendance des administrateurs, soit sur le fonctionnement du conseil (existence de comité d'audit, séparation des fonctions...). La question de la compétence des administrateurs, c'est-à-dire de leur capacité à remplir leur fonction, n'est abordée que de manière indirecte. Un des rôles des conseils d'administration/de surveillance est de s'assurer de la qualité de l'information financière diffusée par l'entreprise, ce qui suppose l'existence d'une compétence comptable et financière au sein du conseil. L'analyse des notices biographiques montre qu'environ la moitié des administrateurs du SBF 120 détient une compétence financière (administrateurs avec une formation de gestion et/ou une expérience dans une fonction financière). Cette compétence est principalement due à la présence de banquiers et de directeurs financiers au sein des conseils. Les résultats indiquent aussi que la compétence financière est largement entre les mains d'administrateurs externes et/ou indépendants au sens du rapport Viénot. Une analyse plus poussée montre que la compétence financière d'un conseil d'administration est associée avec l'âge moyen des administrateurs et avec la structure de l'actionnariat. Plus précisément, la présence d'investisseurs institutionnels favorise l'existence d'une compétence financière mais seulement lorsque l'actionnariat est diffus. Autrement dit, tout se passe comme si les institutionnels déléguaient le rôle de contrôle des états financiers aux « grands actionnaires » si ceux-ci existent, et aux conseils d'administration, si le contrôle est diffus.Compétence financière; conseil d'administration; conseil de surveillance; gouvernement d'entreprise; déterminants