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

Intangibles as source of effective returns in the Iberian stock exchange markets

Literature has assigned to intangible assets the ability to generate future inflows, depending from the rights or privileges that the ownership impacts on the business. In the knowledge based economy, value of business has strengthened the identification of the gap between companies’ accounting and market values. Many companies attempt to manage the value of their intangibles, reporting them to stakeholders. Thus, if intangibles are associated to expected returns, a positive impact on turnover, and on other key performance indicators, is expected. This paper aims the identification of that impact and, furthermore, to evidence the typology of intangibles recognized and disclosed on the annual accounts. Data relates to 127 listed companies in the Iberian Stock Exchange Markets. Multiple regression was run towards the identification of the relationship between turnover and independent variables (e.g. intangibles capitalized in the statement of financial position; intangibles information compliance and disclosure index; human capital). Based on the theoretical model and predicted assumptions, empirical evidence has provided a statistically significant and reasonable basis towards the identification of variables embedded on intrinsic immateriality which can predict the businesses’ turnover.info:eu-repo/semantics/publishedVersio

Culture and profitability: empirical evidence at a European level

Organizational cultures distinguish different organizations within the same country or countries. When comparing the organizations within the same country differences in national cultures are not relevant but become relevant in comparison between different countries. This paper intends to evidence whether the profitability of companies can be influenced by the national culture. In order to characterize the culture of each country, we used the Hofstede measure of cultural dimensions (1. Power Distance (PDI); 2. Uncertainty Avoidance (UAI); 3. Individualism (IDV); 4. Masculinity (MAS); 5. Long-Term Orientation (LTO); and 6. Indulgence vs Restraint (IND)). Sample was based on the 500 largest European companies rated by the Financial Times 2015. Profitability was measured by the ratios Return on Assets (ROA) and Return on Equity (ROE). Statistical tests were performed to test whether the means of the variables used to measure profitability are statistically equal. The results indicate that companies with higher profitability are from countries with lower Power Distance, lower Uncertainty Avoidance, Long-Term Orientation, and Higher Indulgence.info:eu-repo/semantics/publishedVersio

Intellectual capital and profitability: a firm value approach in the European companies

Intangibles are, at a knowledge-based economy, the most important resources, driving companies towards systematic and sometimes unexpected returns. This paper follows a positivist approach and aims to investigate the association between the degree of intangibility, value of firms and their profitability. Based on the 500 largest European companies, rated by Financial Times, the most relevant insights emerge from the association between firms’ knowledge intensity level and its degree of profitability. These insights consolidate the evidences that immaterial resources act as drivers of future benefits and are embodied on firms’ profitability ratios.info:eu-repo/semantics/publishedVersio

Development of liquid xenon detectors for medical imaging

In the present paper, we report on our developments of liquid xenon detectors for medical imaging, positron emission tomography and single photon imaging, in particular. The results of the studies of several photon detectors (photomultiplier tubes and large area avalanche photodiode) suitable for detection of xenon scintillation are also briefly described.Comment: 13 pages, 5 figures, presented on the International Workshop on Techniques and Applications of Xenon Detectors (Xenon01), ICRR, Univ. of Tokyo, Kashiwa, Japan, December 3-4, 2001 (submitted to proceedings

Is the relation between non-controlling interests and parent companies misleading?

This article investigates whether different levels of investor protection affect the equity market’s valuation of non-controlling interests (NCIs) in a consolidated corporate entity. Using a set of publicly listed European firms, our findings suggest a positive (negative) association of NCIs with parent companies’ share prices in countries with low (high) levels of investor protection. We interpret the findings as evidence that when non-controlling investors are not well-protected, parent companies have an opportunity to extract rents from non-controlling owners, leading to a positive valuation of NCIs’ equity. However, in countries where non-controlling investors are well-protected, parent companies are not able to extract rents but still must monitor and govern the related subsidiary; thus, NCIs become a net cost, and the relation inverts.info:eu-repo/semantics/acceptedVersio

Sobre o valor relevante das demonstrações financeiras separadas

A promulgação do Regulamento n.º 1606/2002 obrigou a que as entidades com títulos admitidos à cotação em Bolsa, na União Europeia, preparassem as suas demonstrações financeiras consolidadas de acordo com as International Financial Reporting Standards (IFRS) endossadas, mas concede a cada Estado Membro (EM) a escolha sobre o normativo a utilizar na preparação das demonstrações financeiras separadas. Dada a diversidade pelo facto de os Estados Membros poderem obrigar, permitir, ou proibir a aplicação das IFRS na preparação das demonstrações financeiras separadas das entidades que consolidam, este estudo tem como objetivo perceber se as DF separadas são relevantes, e se essa relevância é condicionada pela proibição ou obrigação do uso das IFRS na sua preparação. Este estudo inclui informação de entidades com títulos admitidos à cotação em bolsa em 17 países da EU nos quais a utilização das IFRS é exigida numas jurisdições e proibida em outras. Os resultados sugerem que as demonstrações financeiras separadas são relevantes para explicar o valor de mercado de uma entidade, e que a proibição do uso das IFRS na preparação dessas DF separadas mitiga o valor relevante do seu capital próprio e dos resultados líquidos, ainda que apenas no caso do capital próprio essa atenuação seja estatisticamente significativa.info:eu-repo/semantics/publishedVersio

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

Board's diversity and the recognition of integrated reports: Are they related?

This paper investigates the influence of Board of Directors’ diversity on the external reputation of highly Integrated Reports, using a set of international entities. Globalization and competitive environment lead companies to diversify their responsibilities to stakeholders and to the society as a whole. Notwithstanding the need to prepare reports to providers of capital, companies currently must report to a broader audience than shareholders, capturing the attention of several categories of stakeholders. They want to know why, where and how companies create and add value, and how they deal with responsibility and sustainability issues. While an increasingly number of entities are disclosing sustainability and corporate social responsibility (CSR) information, there is still little connection between such information, financial information, performance and value creation strategy. This gap has been over debate, and Integrated Reporting () has emerged. Still voluntary in almost all the world, it is indeed gradually encouraged and supported by regulators, institutional investors and organizations, as an innovative nature in promoting a holistic and integrated vision of the company, where the Board of Directors must play an important role (defining strategies, promoting policies and implementing best practices). The main issue we address is whether different characteristics of Directors seated on the Board impact on the external decision to consider the Integrated Report of that company as a Recognized, instead of a Regular one. Differences between Reference and Regular are supported in the attribution of a premium by external parties, or on the independent recommendation to serve as benchmark. Our sample includes 377 entities all over the world identified as preparers, from whom people expect to be accountable for the transparency of their external communication process. Main findings reveal that while the role duality of the CEO has a negative influence, the board size, the independence of the board and the gender diversity are positively contributing to the diffusion of integrated reports of higher recognition, and Experience is not statistical significant. The results are maintained when institutional characteristics of the countries are included.info:eu-repo/semantics/publishedVersio