Accounting information and the prediction of farm viability

Until recently farm management made little use of accounting and agriculture has been largely excluded from the scope of accounting standards. This article examines the current use of accounting in agriculture and points the need to establish accounting standards for agriculture. Empirical evidence shows that accounting can make a significant contribution to agricultural management and farm viability and could also be important for other agents involved in agricultural decision making. Existing literature on failure prediction models and farm viability prediction studies provide the starting point for our research, in which two dichotomous logit models were applied to subsamples of viable and unviable farms in Catalonia, Spain. The first model considered only non-financial variables, while the other also considered financial ones. When accounting variables were added to the model, a significant reduction in deviance was observed.Accounting, agriculture, farm distress, viability, prediction

Regional diversity in the fruit sector in the European Union

This article aims to identify the key groups of regions with respect to farms oriented to fruit and citrus production. Twenty variables of fruit and citrus oriented farms corresponding to forty-one regions of the European Union were analyzed. Seven groups emerged from cluster analysis. Only two of them showed good perspectives. Regions in the South of the Community need an important modernisation and restructuring process, which entails serious social consequences.Fruit sector, agriculture, cluster analysis, regions, European Union

Importancia de la información contable para el análisis y predicción de la viabilidad de las explotaciones agrícolas

Spanish and Western agriculture show a continuous decrease in the number of farms. One of the main factors for this trend is the economic non-viability of many of the existing farms. In addition, interrelationship of agriculture with other industries is growing. Thus, policymakers, banks, creditors and other stakeholders are interested in predicting farm viability. The aim of this paper is to provide empirical evidence that the use of accounting-based information could significantly improve understanding and prediction of various degrees of farm viability. Two multinomial logit models were applied to a sample of farms of Catalonia, Spain. One model included non-accounting-based variables, while the other also considered accounting-based variables. It was found that accounting added significant information to predict various degrees of farm viability. This finding reveals, both the need of encouraging the little existing use of accounting by farms and to develop appropriate accounting standards for agriculture.Accounting, agriculture, farm, non-viability, failure prediction models

Accounting Research: a Critical View of the Present Situation and Prospects

In this study we critically review the internal procedures of the accounting community for generating and disseminating knowledge. We contend that academic journals on accounting research are scarce, publish few articles and apply high rejection rates, and the review process is lengthy and expensive. Additionally, an academic elite has unparalleled predominance in comparison to other business disciplines, reflected in an unusual share of published articles with authors affiliated to a small number of academic institutions, and the predominance of certain topics and methodologies. The discipline does not allow the collaborative, iterative and flexible features of innovative knowledge communities. The discipline’s internal procedures favour restriction, control, slowness, and expiration, rather than participation, speed and renewal. They are ill suited for advancing knowledge and bode badly for successful research. As a result, accounting academics present low research performance and the discipline is facing steady decline. More importantly, the discipline is handicapped in producing innovative knowledge able to contribute to critical research and long term social well-being.We also focus on the Spanish institutional situation, arguing that Spanish requirements for reaching tenured positions are difficult for accountants to meet.We highlight the need to raise awareness of the problem and change the procedures.En este estudio hacemos una revisión crítica de los procedimientos vigentes en la comunidad académica contable para la generación de conocimiento y su publicación. Exponemos que hay pocas revistas académicas para publicar la investigación contable, que éstas publican pocos artículos, aplican elevadas tasas de rechazo y el proceso de revisión es lento y costoso. Además, hay un predominio de una elite académica sin precedentes en otras disciplinas de empresa, lo cual se refleja en un mayor porcentaje de artículos pertenecientes a autores afiliados a un pequeño número de instituciones académicas, y el predominio de ciertos temas y metodologías.La disciplina no presenta los rasgos de colaboración, interactividad y flexibilidad propios de las comunidades dinámicas e innovadoras en la producción de conocimiento. El funcionamiento de la disciplina está más orientado al control que al avance del conocimiento.Los procedimientos seguidos en la disciplina no son los más apropiados para favorecer el éxito en la investigación. En consecuencia, los académicos contables presentan poca producción investigadora y tienen dificultades para desarrollar con éxito una carrera investigadora. Lo que es aún más importante, la disciplina ofrece pocas posibilidades de generar investigación crítica en cuestiones sociales y medioambientales.Este trabajo analiza también la situación institucional en España, aduciendo que los requisitos exigidos para alcanzar posiciones de estabilidad académica son difíciles de conseguir para los académicos que se dedican a la contabilidad.Ponemos de relieve la necesidad de tomar conciencia del problema, como primer paso para cambiar el funcionamiento de la disciplina

Audit tenure and audit Qualifications in a low litigation risk setting: An analysis of the Spanish market

The main role of the external auditor in the classical corporate governance scheme is to verify the accounting information provided by the firms' managers. Lengthy audit engagements are viewed as a main threat to preserve auditor independence, and therefore regulators have established mandatory rotation rules in many countries worldwide.Tenencia de auditorías y calificaciones de auditorías en un ambiente de bajo riesgo de litigios. Un análisis del mercado españo

The interaction effects of firm and partner tenure on audit quality

This paper investigates the impact of firm and partner tenure on audit quality, where audit quality is proxied by discretionary accruals. We study a sample of Spanish listed companies between 2005 and 2011 and address both the individual and the interaction effects of firm and partner tenure. Our study is motivated by the current debate, particularly intense at the EU level, on the impact of the auditor rotation regime on the quality of auditing. We find that, without considering the interaction effects, firm and partner tenure do not seem to play a relevant role as determinants of audit quality. Importantly, the interaction of firm and partner tenure shows stronger effects on audit quality than both forms of tenure separately considered. Finally, our analysis suggests that audit quality is maximized when medium firm and partner tenures interact. However, results for the interaction variables are sensitive to the accruals estimation method

Agriculture, Profitability and Climate Change: Can Accounting Help Identify Best Farming Practices? Empirical Case Study in Spain

We perform an empirical analysis on the benefits of, and the challenges faced by, sustainability accounting in measuring the effects of climate change for a sample of Spanish rice farms. We use farm yields, revenues and incomes as indicators of economic performance, and greenhouse gas emissions, and direct and indirect energy consumption as indicators of climate change effects. According to our data, farms with higher yields, revenues and income are responsible for a greater environmental impact, measured in total gigajoules of energy consumed and tons of carbon dioxide emitted, than farms with a lower economic performance. Results show that in our sample the achievement of higher yields is attributable to the greater use of chemical inputs and fossil fuels and not to innovative and sustainable farming practices. The results indicate that accounting for climate change effects is not only possible but also necessary to provide more accurate information on the overall costs and benefits of farming. Greater transparency in accounting information should serve to highlight which farming activities are better able to reduce climate change impacts

Productivity and environmental costs from intensification of farming. A panel data analysis across EU regions

This paper addresses the need of finding new ways of measuring environmental and economic performance of farming. The aim of this study is to inquire on the impacts that excessive intensification has on productivity and environmental costs in the long term and, additionally to explore empirically the trend of these two indicators over time. The contribution of this study is twofold: (a) to engage in the discussion that although intensification can boost yields and lower costs in the short-term, it might lead in the opposite direction in the long-term due to environmental and economic issues and (b) to explore current trends of productivity and environmental costs of farming. To this end, this paper performs a panel data analysis of productivity and environmental costs on a farm accounting database across European regions over the 1989-2009 period. The methodology uses output as an indicator of productivity and expenditures on energy, pesticides and fertilisers as proxy indicators of environmental costs. Results provide empirical evidence that regions under study have a negative trend of productivity and a positive trend of environmental costs in the years under study. These results correlate negatively with both, economic and environmental sustainability of farms. Arguably, this is aggravated in the latter due to hidden environmental costs valued at zero in traditional accounting

Audit firm tenure and audit quality: A cross-European study

Directive 2014/56/EU and Regulation (EU) No. 537/2014, which came into effect in June 2016, introduced the mandatory rotation of audit firms after a maximum period of 10 years with the same client. We conduct a cross‐European study with the aim of assessing whether long audit firm tenures are associated with lower levels of audit quality. The sample for the study is based on the constituents of the Standard & Poor's Europe 350 index for the years between 2009 and 2016, and we utilize three different sets of proxies for audit quality: discretionary accruals, differences between reported earnings and earnings benchmarks, and accounting restatements. The main result of the study finds that companies with more than 10 years of tenure with their auditors do not have a lower audit quality than other firms. In fact, this study provides some evidence of a higher audit quality for these firms. The results are robust to various checks. Therefore, if there does not seem to be a problem of a lack of audit quality associated with long audit firm tenures, the necessity of establishing a maximum tenure, as the new European regulation does, may be questioned