17 research outputs found
CONSIDERATIONS ON REORGANIZATION. A COMPARISON OF REORGANIZATION RATES IN EASTERN EUROPE
In our paper, we discuss reorganization from two points of view: its purpose and the choice between reorganization and liquidation, by reviewing the existing literature. After setting an appropriate theoretical base for interpretation, we focus on comparireorganization rate, reorganization versus liquidation, Eastern Europe
Labor Costs of Implementing New Accounting Standards
While much research focuses on the informational benefits of new accounting standards, the costs of implementing new standards remain unclear. We examine the adoption of two new major standards: lease accounting and revenue recognition. We find increase in the number of accounting job postings, related to those standards, in standardsâ issuance years. Firms most affected by new standards, measured by accounting complexity and early adoption behavior, post higher number of accounting jobs. We estimate incremental labor costs at about 30 percent of median audit fees for each standard for the most affected firms. These costs, as a percentage of their total employee cost, are higher for smaller firms, indicating greater regulatory-compliance burden. We provide large-sample evidence on the direct labor costs, and thus on the lower bound of implementation costs associated with new accounting standards. Our findings should interest standard setters as they evaluate cost-benefit tradeoffs before issuing new standards
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The Effects of MiFID II on Sell-Side Analysts, Buy-Side Analysts, and Firms
This paper provides early but broad empirical evidence on a major new investor protection regulation in Europe, MiFID II, which requires investment firms to unbundle investment research from other costs they charge to clients. We predict that the price separation resulting from unbundling and a hard-dollar system leads to a shrinking of the market for sell-side investment research, manifested in lower quantity of sell-side coverage that is of higher quality than before the regulation. We test our predictions in difference-in-differences matched-sample research designs with firm fixed effects. We find a decrease in the number of sell-side analysts covering European firms after MiFID II implementation, particularly for firms that are less important to the sell-side. However, research quality improves; specifically, individual analyst forecasts are more accurate and stock recommendations garner greater market reactions. In addition, sell-side analysts seem to cater more to the buy-side after MiFID II by providing industry recommendations along with stock recommendations. Importantly, we predict and find evidence that buy-side investment firms turn to more in-house research after MiFID II implementation. Equally interesting, buy-side analysts increase their participation and engagement in earnings conference calls compared to the control group. Finally, we find some evidence that stock-market liquidity decreases post-MiFID II. Our findings have implications beyond Europe, as investors are currently pressuring the U.S. Securities and Exchange Commission to adopt a similar regulation
Three essays on operating segment disclosure
Cette thĂšse contient trois essais distincts sur la publication dâinformation sectorielle que les entreprises europĂ©ennes ayant plusieurs secteurs opĂ©rationnels effectuent en vertu des IFRS 8 Secteurs OpĂ©rationnels. Chaque essai vise Ă amĂ©liorer notre comprĂ©hension collective sur la politique de communication financiĂšre des cadres dirigeants en examinant diverses caractĂ©ristiques des informations sectorielles. Le chapitre I, âLâinteraction entre la qualitĂ© et la quantitĂ© des publications sur lâinformation sectorielleâ examine le choix des cadres dirigeants Ă l'Ă©gard de la quantitĂ© et de la qualitĂ©, ainsi que lâutilitĂ© de ces deux caractĂ©ristiques pour les analystes financiers. Jâutilise le nombre de segments opĂ©rationnels publiĂ©s comme mesure quantitative et la variation inter-sectorielle de la profitabilitĂ© comme mesure qualitative et soutiens que plus de pouvoir discrĂ©tionnaire peut ĂȘtre exercĂ© par les dirigeants sur la qualitĂ© que sur la quantitĂ©. Je trouve que les cadres dirigeants rĂ©solvent les prĂ©occupations liĂ©es aux renseignements commerciaux de nature exclusive soit en dĂ©viant de a quantitĂ© recommandĂ©e par la norme, ou, lorsquâils suivent la norme, en rĂ©duisant la qualitĂ© de lâinformation sectorielle. Les analystes financiers nâapprĂ©cient pas toujours la qualitĂ© de lâinformation sectorielle, ce qui suggĂšre que le modĂšle business crĂ©e des difficultĂ©s mĂȘme pour des utilisateurs avertis. Mes rĂ©sultats informent les normalisateurs lorsque ceux-ci initient le dĂ©veloppement dâun nouveau cadre conceptuel et lorsquâils semblent envisager lâapproche du modĂšle business pour le reporting. Le chapitre II s'intitule «La non-conformitĂ© des secteurs opĂ©rationnels Ă travers des documents d'entreprise. » Les rĂ©gulateurs de marchĂ© examinent des cas de prĂ©sentations lorsqu'une entreprise fournit des informations diffĂ©rentes sur le mĂȘme sujet dans diffĂ©rents documents. En mettant lâaccent sur les secteurs opĂ©rationnels, cet essai utilise des donnĂ©es recueillies manuellement auprĂšs de quatre documents dâentreprise afin d'analyser l'impact de la publication dâinformation non-conforme sur lâexactitude des prĂ©visions de rĂ©sultat des analystes financiers. La non-conformitĂ© qui dĂ©coule de la dĂ©sĂ©grĂ©gation supplĂ©mentaire des secteurs semble introduire de nouveautĂ©s et contribue Ă lâexactitude des prĂ©visions. La publication des segmentations difficilement rĂ©conciliables entraine une exactitude rĂ©duite des prĂ©visions. Ces rĂ©sultats contribuent Ă notre comprĂ©hension des effets de la politique de communication des dirigeants Ă travers plusieurs documents et ont des rĂ©percussions sur le travail les rĂ©gulateurs. Le chapitre III s'intitule « PrĂ©visions managĂ©riales au niveau sectoriel. » Je considĂšre les prĂ©visions au niveau sectoriel (PNS) comme un type d'information dĂ©sagrĂ©gĂ© que les entreprises fournissent ensemble avec leur stratĂ©gie de gestion. Jâexamine lâutilitĂ© de cette information pour lâexactitude des prĂ©visions de rĂ©sultat par les analystes ainsi que lâimpact de cette information sur la manipulation du rĂ©sultat. Je constate que les entreprises de haute technologie rĂ©putĂ©es pour lâincertitude supplĂ©mentaire liĂ©e Ă profitabilitĂ© sont moins susceptibles de fournir des PNS et que le PNS est associĂ© Ă une prĂ©vision amĂ©liorĂ©e. Cependant, alors que la communication de davantage de PNS dĂ©sagrĂ©gĂ© par secteur a tendance Ă amĂ©liorer la prĂ©cision, plus de prĂ©cision ne semble pas avoir dâimportance. Du point de vue des cadres dirigeants, les PNS les incitent Ă manipuler le rĂ©sultat comptable, mais le PNS dĂ©sagrĂ©gĂ© par poste semble dĂ©courager la manipulation, fort probablement due Ă une surveillance supplĂ©mentaire. Dans un contexte oĂč une orientation narrative et dĂ©sagrĂ©gĂ©e est considĂ©rĂ©e comme la solution pour empĂȘcher la vision Ă court terme, comprendre quel type d'information permet dâatteindre cet objectif, et de quelle maniĂšre, est tout autant pertinent pour les cadres dirigeants, les investisseurs et les rĂ©gulateurs.This thesis contains three stand-alone essays on the operating segment disclosures that European multi-segment companies make under IFRS 8 Operating Segments. Each essay aims to improve our collective understanding about managersâ disclosure strategy by examining various characteristics of operating segment disclosure. Chapter I, entitled âThe Interplay between Segment Disclosure Quantity and Quality,â investigates managersâ choices with respect to both disclosure quantity and disclosure quality, and the usefulness of these two characteristics for financial analysts. Focusing on segment disclosures under the management approach, I measure quantity as the number of segment-level line items and quality as the cross-segment variation in profitability, and argue that greater managerial discretion can be exercised over quality than over quantity. I hypothesize and find that managers solve proprietary concerns either by deviating from the suggested line-item disclosure in the standard, or if following standard guidance, by decreasing segment reporting quality. Moreover, financial analysts do not always understand the quality of segment disclosures, which suggests that a business-model type of standard creates difficulties even for sophisticated users. My results inform standard setters as they start working on a disclosure framework and as they seem to consider the business model approach to financial reporting. Chapter II is entitled âInconsistent Segment Disclosure across Corporate Documents.â Market regulators in the U.S. and Europe investigate cases of inconsistent disclosures when a company provides different information on the same topic in different documents. Focusing on operating segments, this essay uses hand-collected data from four different corporate documents of multi-segment firms to analyze the impact of inconsistent disclosure on financial analystsâ earnings forecast accuracy. Inconsistencies that arise from further disaggregation of operating segments in some documents seem to bring in new information and increase analyst accuracy. However, when analysts must work with different, difficult-to-reconcile segmentations, their information processing capacity and forecasts are less accurate. These findings contribute to our understanding of the effects of managersâ disclosure strategy across multiple documents and have implications for regulators and standard settersâ work on a disclosure framework. Chapter III is entitled âManagement Guidance at the Segment Level.â Prior research has found that managers add information to their earnings guidance to justify, explain, or contextualize their forecasts. I identify segment-level guidance (SLG) as a type of disaggregated information that multi-segment firms provide with their management guidance, and investigate its usefulness for financial analystsâ earnings forecasting accuracy, as well as its influence on managersâ earnings fixation. I further characterize the level of precision (point and range, maximum or minimum estimate, or simply narrative) and of disaggregation of SLG. I find that companies in high tech industries known for increased uncertainty in future performance are less likely to provide SLG, and that SLG is associated with better forecasting accuracy. However, while providing more item-disaggregated SLG improves accuracy, increased precision has no impact on forecast accuracy. From the managerâs point of view, SLG creates incentives to engage in earnings management, and the more precise the SLG is the greater the incentive. In contrast, more item-disaggregated SLG discourages earnings management, perhaps by improving monitoring. In a context where qualitative, narrative, and disaggregated guidance is regarded as a solution to avoid earnings fixation and short termism, understanding which types of information achieve this goal, and how, is relevant for managers, investors, and regulators alike
Trois essais sur la publication de l'information sectorielle
This thesis contains three stand-alone essays on the operating segment disclosures that European multi-segment companies make under IFRS 8 Operating Segments. By examining various characteristics of disclosure about operating segments using manually-collected data from a range of public corporate documents, this thesis improves our collective understanding about managersâ overall disclosure strategy for financial and accounting information. The findings in each essay have practical implications for standard setters and regulators in particular, as well as for capital market investors and financial analysts.Chapter I, entitled âThe Interplay between Segment Disclosure Quantity and Quality,â investigates managersâ choices with respect to both disclosure quantity and disclosure quality, and the usefulness of these two characteristics for financial analysts. Focusing on segment disclosures under the management approach, I measure quantity as the number of segment-level line items and quality as the cross-segment variation in profitability, and argue that greater managerial discretion can be exercised over quality than over quantity. I hypothesize and find that managers solve proprietary concerns either by deviating from the suggested line-item disclosure in the standard, or if following standard guidance, by decreasing segment reporting quality. Moreover, financial analysts do not always understand the quality of segment disclosures, which suggests that a business-model type of standard creates difficulties even for sophisticated users. My results inform standard setters as they start working on a disclosure framework and as they seem to consider the business model approach to financial reporting. Chapter II is entitled âInconsistent Segment Disclosure across Corporate Documents.â Market regulators in the U.S. and Europe investigate cases of inconsistent disclosures when a company provides different information on the same topic in different documents. Focusing on operating segments, this essay uses hand-collected data from four different corporate documents of multi-segment firms to analyze the impact of inconsistent disclosure on financial analystsâ earnings forecast accuracy. Inconsistencies that arise from further disaggregation of operating segments in some documents seem to bring in new information and increase analyst accuracy. However, when analysts must work with different, difficult-to-reconcile segmentations, their information processing capacity and forecasts are less accurate. These findings contribute to our understanding of the effects of managersâ disclosure strategy across multiple documents and have implications for regulators and standard settersâ work on a disclosure framework. Chapter III is entitled âManagement Guidance at the Segment Level.â Prior research has found that managers add information to their earnings guidance to justify, explain, or contextualize their forecasts. I identify segment-level guidance (SLG) as a type of disaggregated information that multi-segment firms provide with their management guidance, and investigate its usefulness for financial analystsâ earnings forecasting accuracy, as well as its influence on managersâ earnings fixation. I further characterize the level of precision (point and range, maximum or minimum estimate, or simply narrative) and of disaggregation of SLG. I find that companies in high tech industries known for increased uncertainty in future performance are less likely to provide SLG, and that SLG is associated with better forecasting accuracy. However, while providing more item-disaggregated SLG improves accuracy, increased precision has no impact on forecast accuracy. From the managerâs point of view, SLG creates incentives to engage in earnings management, and the more precise the SLG is the greater the incentive. In contrast, more item-disaggregated SLG discourages earnings management, perhaps by improving monitoring. In a context where qualitative, narrative, and disaggregated guidance is regarded as a solution to avoid earnings fixation and short termism, understanding which types of information achieve this goal, and how, is relevant for managers, investors, and regulators alike.Cette thĂšse contient trois essais distincts sur la publication dâinformation sectorielle que les entreprises europĂ©ennes ayant plusieurs secteurs opĂ©rationnels effectuent en vertu des IFRS 8 Secteurs OpĂ©rationnels. Chaque essai vise Ă amĂ©liorer notre comprĂ©hension collective sur la politique de communication financiĂšre des cadres dirigeants en examinant diverses caractĂ©ristiques des informations sectorielles. Les rĂ©sultats de cette thĂšse informent les normalisateurs en particulier, ainsi que les investisseurs sur les marches du capital et les analystes financiers.Le chapitre I, «Lâinteraction entre la qualitĂ© et la quantitĂ© des publications sur lâinformation sectorielle» examine le choix des cadres dirigeants Ă l'Ă©gard de la quantitĂ© et de la qualitĂ©, ainsi que lâutilitĂ© de ces deux caractĂ©ristiques pour les analystes financiers. Jâutilise le nombre de segments opĂ©rationnels publiĂ©s comme mesure quantitative et la variation inter-sectorielle de la profitabilitĂ© comme mesure qualitative et soutiens que plus de pouvoir discrĂ©tionnaire peut ĂȘtre exercĂ© par les dirigeants sur la qualitĂ© que sur la quantitĂ©. Je trouve que les cadres dirigeants rĂ©solvent les prĂ©occupations liĂ©es aux renseignements commerciaux de nature exclusive soit en dĂ©viant de la quantitĂ© recommandĂ©e par la norme, ou, lorsquâils suivent la norme, en rĂ©duisant la qualitĂ© de lâinformation sectorielle. Les analystes financiers nâapprĂ©cient pas toujours la qualitĂ© de lâinformation sectorielle, ce qui suggĂšre que le modĂšle business crĂ©e des difficultĂ©s mĂȘme pour des utilisateurs avertis. Mes rĂ©sultats informent les normalisateurs lorsque ceux-ci initient le dĂ©veloppement dâun nouveau cadre conceptuel et lorsquâils semblent envisager lâapproche du modĂšle business pour le reporting. Le chapitre II s'intitule «La non-conformitĂ© des secteurs opĂ©rationnels Ă travers des documents d'entreprise. » Les rĂ©gulateurs de marchĂ© examinent des cas de prĂ©sentations lorsqu'une entreprise fournit des informations diffĂ©rentes sur le mĂȘme sujet dans diffĂ©rents documents. En mettant lâaccent sur les secteurs opĂ©rationnels, cet essai utilise des donnĂ©es recueillies manuellement auprĂšs de quatre documents dâentreprise afin d'analyser l'impact de la publication dâinformation non-conforme sur lâexactitude des prĂ©visions de rĂ©sultat des analystes financiers. La non-conformitĂ© qui dĂ©coule de la dĂ©sĂ©grĂ©gation supplĂ©mentaire des secteurs semble introduire de nouveautĂ©s et contribue Ă lâexactitude des prĂ©visions. La publication des segmentations difficilement rĂ©conciliables entraine une exactitude rĂ©duite des prĂ©visions. Ces rĂ©sultats contribuent Ă notre comprĂ©hension des effets de la politique de communication des dirigeants Ă travers plusieurs documents et ont des rĂ©percussions sur le travail les rĂ©gulateurs. Le chapitre III s'intitule « PrĂ©visions managĂ©riales au niveau sectoriel. » Je considĂšre les prĂ©visions au niveau sectoriel (PNS) comme un type d'information dĂ©sagrĂ©gĂ© que les entreprises fournissent ensemble avec leur stratĂ©gie de gestion. Jâexamine lâutilitĂ© de cette information pour lâexactitude des prĂ©visions de rĂ©sultat par les analystes ainsi que lâimpact de cette information sur la manipulation du rĂ©sultat. Je constate que les entreprises de haute technologie rĂ©putĂ©es pour lâincertitude supplĂ©mentaire liĂ©e Ă profitabilitĂ© sont moins susceptibles de fournir des PNS et que le PNS est associĂ© Ă une prĂ©vision amĂ©liorĂ©e. Cependant, alors que la communication de davantage de PNS dĂ©sagrĂ©gĂ© par secteur a tendance Ă amĂ©liorer la prĂ©cision, plus de prĂ©cision ne semble pas avoir dâimportance. Du point de vue des cadres dirigeants, les PNS les incitent Ă manipuler le rĂ©sultat comptable, mais le PNS dĂ©sagrĂ©gĂ© par poste semble dĂ©courager la manipulation, fort probablement due Ă une surveillance supplĂ©mentaire. Dans un contexte oĂč une orientation narrative et dĂ©sagrĂ©gĂ©e est considĂ©rĂ©e comme la solution pour empĂȘcher la vision Ă court terme, comprendre quel type d'information permet dâatteindre cet objectif, et de quelle maniĂšre, est tout autant pertinent pour les cadres dirigeants, les investisseurs et les rĂ©gulateurs
Online Appendix for Accounting for Intangible AssetsâInsights from Meta-Analysis of R&D Research
Accounting for intangible assets â insights from meta-analysis of R&D research
International audiencePurpose The knowledge- and Internet-based economy demands a reexamination of the accounting treatment for intangibles and a thorough understanding of the empirical evidence on this topic. Design/methodology/approach The study reviews the literature on research and development (R&D), a specific internally developed intangible asset, using meta-analysis techniques that allow to highlight the areas of consensus and disagreement in quantitative empirical results. The literature the authors review addresses four main research questions on (1) the determinants of the decision to capitalize R&D, (2) stock market-based outcomes of capitalizing R&D, (3) firm-based outcomes related to expensing R&D and (4) stock market-based outcomes of expensing R&D. Findings The authors find higher value relevance of capitalized compared with expensed R&D. There is, however, little robust evidence on the determinants of the capitalization decision and the characteristics of capitalizers. Originality/value The authors conclude by highlighting future research that can allow accounting academics to contribute to standard setting
Digitizing Luxury - Growth, Profitability, and Financial Flexibility at YOOX: Case Study for Graduate Level
Diversified Firms and Analyst Earnings Forecasts: The Role of Management Guidance at the Segment Level
CONSIDERATIONS ON REORGANIZATION. A COMPARISON OF REORGANIZATION RATES IN EASTERN EUROPE
In our paper, we discuss reorganization from two points of view: its purpose and the choice between reorganization and liquidation, by reviewing the existing literature. After setting an appropriate theoretical base for interpretation, we focus on compar