Effects of adopting IFRS 10 and IFRS 11 on consolidated financial statements: an exploratory research

Purpose: This paper investigates how the adoption of IFRS 10 and IFRS 11 affected consolidated financial statements. Specifically, the paper explores whether entities adopted mandatorily or voluntarily both IFRS, whether expressly declared effects, whether considered those effects as material and whether those effects had impacts on selected items of financial statements and on selected financial ratios. Design/methodology/approach: The research is an exploratory study using public entities from France, Germany and the United Kingdom. The majority of the data are manually collected from financial statements. Findings: The results suggest that the adoption of the new IFRS 10 affected the composition of a large number of entity groups but that their financial information and economic-financial indicators do not present material changes. There is also evidence of a large and material impact on the changes in the classification and accounting for interests in arrangements under joint control through the new IFRS 11. The evidence thus suggests unequal effects of the adoption of IFRS 10 and IFRS 11 on the proportion of entities declaring materiality of effects, on the quantitative effects on selected items of financial statements, and on financial ratios. A comparison between the pre-adoption and post-adoption periods reveals that the majority of the effects are driven by the adoption of IFRS 11. Originality/value: This exploratory paper is the first presenting the effectiveness of adopting the most important standards under the “consolidation package” and opens an avenue for future research by academics, for future post-implementation reviews by IASB, and for analysis of peer reviews between accounting practitioners.info:eu-repo/semantics/acceptedVersio

Culture dimensions and application of IFRSs in the banking industry

Using European and Asian banks, this paper investigates how differences in culture in different countries can be related with Loan loss provisions (LLP) based on the Hofstede’s theory. The effect of the application of International Financial Reporting Standards (IFRSs) on the amount of LLP recognized in financial statements published by Banks is also under analysis. Findings suggest that some culture dimensions play a role when analyzing risk factors, but not in all situations. When scores based on characteristics and behavior attributable to national culture are conflicting, the influence of culture on loan loss provisions is rejected. However, the application of IFRSs (vs local GAAP) has an important role, changing the power of national culture to influence the levels of LLP in countries where the scores of culture dimensions are according to the theory, and mitigating that influence when the scores are conflicting, moderating the amount of LLP that Banks should report regardless of culture behavior.info:eu-repo/semantics/publishedVersio

La participación de organismos de América Latina en el IASB: Un papel creciente de actualización e de influencia

Accounting in Latin American countries has potential to become an important topic for research. These countries, integrated in emergent economies, have been increasing an important role in the global economy. The main objective of this paper is to put in evidence the role, efforts and influence of multiple standard-settings and supervisory entities from Latin American countries (LATAM) on the IASB’ standards making process, with a particular emphasis in 2010 onwards. The results show that the increased participation of LATAM countries in an international context is important for understand the high degree of convergence of local standards to international accounting standards.info:eu-repo/semantics/publishedVersio

Does earnings management influence dividend policies? An approach with unlisted firms

The goal of this paper is to analyze whether the firms’ dividend policy is influenced by the existence of earnings management practices, particularly under different ownership contexts. In the paper, three well-known discretionary accruals methodologies are applied to measure earnings management. The empirical study relies on an innovative set of 4,258 unlisted private companies, representing a panel of around 20 thousand observations distributed over the period 2013-2017. The study is focused only in one European country to avoid different institutional and country characteristics that could bias the findings. Our firs result reveals a positive statistically significant relationship between the earnings management and dividend policy, meaning that private non-listed companies managing earnings are more likely to distribute a higher level of dividends. However, a deeper analysis shows that the ability of earnings management practices to predict the dividend policy is driven by ownership concentration. Spliting the sample, we find that the positive influence of earnings management on dividend policy in non-listed private companies is statistically significant only in companies whose shareholders have control (more than 50% of share capital) as opposed to firms with non-concentrated ownership. Our results contribute for the literature around the quality of financial reporting, lengthening these thematic to include non-listed companies.info:eu-repo/semantics/publishedVersio

Solar activity during the Holocene: the Hallstatt cycle and its consequence for grand minima and maxim

Cosmogenic isotopes provide the only quantitative proxy for analyzing the long-term solar variability over a centennial timescale. While essential progress has been achieved in both measurements and modeling of the cosmogenic proxy, uncertainties still remain in the determination of the geomagnetic dipole moment evolution. Here we improve the reconstruction of solar activity over the past nine millennia using a multi-proxy approach. We used records of the 14C and 10Be cosmogenic isotopes, current numerical models of the isotope production and transport in Earth's atmosphere, and available geomagnetic field reconstructions, including a new reconstruction relying on an updated archeo-/paleointensity database. The obtained series were analyzed using the singular spectrum analysis (SSA) method to study the millennial-scale trends. A new reconstruction of the geomagnetic dipole field moment, GMAG.9k, is built for the last nine millennia. New reconstructions of solar activity covering the last nine millennia, quantified in sunspot numbers, are presented and analyzed. A conservative list of grand minima and maxima is provided. The primary components of the reconstructed solar activity, as determined using the SSA method, are different for the series based on 14C and 10Be. These primary components can only be ascribed to long-term changes in the terrestrial system and not to the Sun. They have been removed from the reconstructed series. In contrast, the secondary SSA components of the reconstructed solar activity are found to be dominated by a common ~2400-yr quasi-periodicity, the so-called Hallstatt cycle, in both the 14C and 10Be based series. This Hallstatt cycle thus appears to be related to solar activity. Finally, we show that the grand minima and maxima occurred intermittently over the studied period, with clustering near highs and lows of the Hallstatt cycle, respectively.Comment: In press in Astronomy & Astrophysics, doi: 10.1051/0004-6361/20152729

Engaged in integrated reporting? Evidence across multiple organizations

Purpose: The purpose of this paper is twofold: to provide evidence on geographic and firm-level characteristics within organizations using integrated reporting (IR) methodology to communicate their business model to stakeholders; and to shed light on the contend of integrated reports of organizations that have been recognized as leading practice by a reputable award process or through benchmarking. Design/methodology/approach: Secondary analysis of data (descriptive and inferential statistics) is used for a sample of 224 organizations (79 classified as IR Reference Reporters and 145 as IR Regular Reporters) across 26 countries (2011 to mid-2015). Content analysis is used for IR Reference Reporters. Findings: Evidence for the first objective suggests that compared with IR Regular Reporters, the majority of the IR Reference Reporters are from Europe, are larger, have a higher market value, are more profitable and are less leveraged. Evidence for the second objective reveals that the guiding principles, fundamental concepts and content elements of the most recent integrated report published by each IR Reference Reporter (leading practice) seem less than expected. Research limitations/implications: IR Examples Database does not cover all of the organizations reporting according to the IR framework. Content analysis can be biased by authors’ interpretations. Practical implications: Potential benefit both to researchers and to those involved in the reporting of financial and non-financial information using the IR tool. Originality/value: The originality of the paper is as follows: it contributes to the international debate on the evolution from sustainability to IR, provides evidence on geographies and firm-level characteristics of organizations using IR to better communicate and provides the most prominent information disclosed by Reference Reporters.info:eu-repo/semantics/acceptedVersio

From little seeds to a big tree: A far-reaching assessment of the Integrated reporting stream

The purpose of this paper is to provide the first assessment of the Integrated Reporting stream using a broad sample of publications separated into research scopes (accounting and non-core accounting journals), and using a longitudinal perspective. This study proposes to identify its main contributors, evidencing both individual and collaborative work. Bibliometric tools supported by a milestone approach to IR history were used to address the first two research questions on the growth of this stream per scope. Density maps on keyword co-occurrence provided insights into the third question aimed at assessing differences in the scopes’ research topics. Number of publications, citation-based metrics, and network analysis based on co-authorship allowed us to answer the last question regarding the top contributors. The results endorse the acknowledged interest in this stream, exposing its incredible growth, which already amounts to over 1000 different scholars, 200 distinguished journals, and 7600 citations across 540 peer-reviewed publications. With the accounting scope leading on citation frequency, and the non-core accounting having more publications, an almost picture-perfect circle in a pooled density map supports the field’s advocated interdisciplinarity with its distinctive contributions. Lastly, the cluster analysis revealed that 140 publications belong exclusively to 10 research clusters that contribute to more than half of the total citation count. This rich analysis combines visualizing techniques with in-depth bibliometrics to provide the first far-reaching collation of publications on IR to offer a complementary view on this dynamic interdisciplinary stream.info:eu-repo/semantics/acceptedVersio

In the shoes of accounting students: Perceptions of the skills needed for a successful career

Students are an important stakeholder group in higher education institutions (HEIs). This paper aims to examine students’ perceptions of the most important skills for a successful career in the accounting profession, and to identify how these perceptions vary among students with different academic profiles. Focusing on undergraduate and masters students, the analysis of the data indicate that perceptions differ according to students’ educational accounting profiles (level of education, professional experience, and business school excellence). The results show that students are clearly aware of the skill sets required by recruiters, but assign them varying levels of importance. The results have practical implications for academia (enhancing the perceived skills to meet objectives), recruiters (contributing to shaping the skills of aspirants), and students (matching their views with that of industry requirements).info:eu-repo/semantics/acceptedVersio

Are provisions and contingent liabilities priced by the market? An exploratory study in Portugal and the United Kingdom

Purpose: This paper aims to examine pricing differences regarding contingencies presented in statements of financial position or notes, which are considered an area for creative accounting. Design/methodology/approach: The authors have chosen two countries with different cultural environments to test the exploratory study. The sample includes companies using the International Accounting Standard (IAS) 37, which requires recognition of provisions while contingent liabilities are only disclosed, implying different impacts from underlying judgement related with contingencies. The authors apply a regression model based on the Ohlson equity-valuation framework. Findings: The most important conclusion is that market participants in both countries follow different patterns when incorporating information about provisions and contingent liabilities. More precisely, the results suggest that provisions are value-relevant, but incrementally less negative in Portugal. Contingent liabilities seem to have no value relevance. However, an exception exists for Portuguese companies having a risk committee board, in which case a significant market valuation of contingent liabilities is found and discounted in share prices. The existence of a risk committee corroborates the value relevance of this board, which is positively valued by market participants in both national cultures. Practical implications: The findings may make a contribution to the IASB research project on the IAS 37 and possible amendments to it (suspended until the revisions to the conceptual framework are finalized) and to the IASB prioritization of communication effectiveness of financial statements to all users. Originality/value: Value relevance of contingencies differentiating countries from two different national cultures and firms with a risk committee on the board of directors.info:eu-repo/semantics/acceptedVersio

Exploring the value relevance of biological assets and bearer plants: An analysis with IAS 41 Revision

The purpose of this paper is to explore whether a relation exists between share market valuation and the accounting information about bearer plants and biological assets. The focus is supported in the most recent revision of IAS 41 Agriculture. This revision formally introduced the concept of bearer plants, moved them from biological assets to PP&E, and changed their prior measurement by the fair value model to the cost model. Our approach explores the usefulness of these changes under a valuation market approach. Our analysis settles that there is a positive association between share prices and agricultural-related assets. Overall, our results suggest that biological assets are value relevant and reveal that bearer plants are incrementally value relevant after IAS 41 revision. Besides, we envisage that these conclusions are driven by companies in countries where the value add of agriculture, forestry, and fishing as a percentage of the country’s GDP is lower.info:eu-repo/semantics/publishedVersio