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So far Financial Reporting has created 115 blog entries.

La value relevance incrementale dell’other comprehensive income rispetto al net income. Un’analisi sulle società quotate in Italia

By | 2017-12-29T17:39:36+01:00 December 27th, 2017|

Veltri Stefania, Ferraro Olga/ Financial Reporting, Riviste/ Fascicolo: 3-2012

L’obiettivo principale dello studio è quello di testare l’assunzione, validata da una parte della letteratura, che l’Other Comprehensive Income (OCI) items reporting sia value relevant per gli investitori in misura incrementale, ossia che fornisca loro informazioni aggiuntive rispetto al reddito netto. La rassegna della letteratura evidenzia risultati contraddittori. Gli autori ipotizzano che una delle principali cause dell’inconsistenza dei risultati dipenda dall’utilizzo di dati che si riferiscono a periodi precedenti l’introduzione degli standard contabili sul Comprehensive Income (CI). Di conseguenza, hanno testato l’ipotesi di ricerca utilizzando dati relativi a periodi successivi allo IAS 1 revised 2007, in cui è esplicitamente richiesto alle aziende di presentare le componenti in bilancio. Il campione è costituto dai gruppi quotati alla borsa valori di Milano. L’analisi di regressione fornisce evidenza della value relevance incrementale dell’OCI rispetto al reddito netto.

The main aim of the article is to test that the Other Comprehensive Income (OCI) is incrementally value relevant for investors with respect to net income. Literature review highlights mixed results. The authors, hypothesizing that one of the main causes of the inconsistency of results is the use of OCI data from the period before implementation of comprehensive income reporting (as if OCI numbers), used in their value relevance regression analysis as reported OCI numbers in the listed companies’ financial accounts. The sample comprehends the groups listed on the Milan Stock Exchange. Our evidence supports the conclusion that the as reported OCI numbers are incrementally value relevant for investors.

Keywords: value relevance, net income, other comprehensive income, Italy, listed, groups, as reported data

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Un paio di riflessioni sulle regole per le abilitazioni scientifiche nazionali

By | 2017-12-29T17:40:02+01:00 December 27th, 2017|

Quagli Alberto/ Financial Reporting, Riviste / Fascicolo: 3-2012

Con il mese di agosto del 2012 si è completato il quadro normativo per far  ripartire i concorsi universitari con le nuove regole, secondo le quali una commissione attribuirà l’idoneità nazionale di professori di prima e seconda fascia  ai candidati meritevoli, che potranno quindi esser chiamati dagli Atenei interessati. In rapida successione, il Ministero dell’Istruzione, dell’Università e  della Ricerca (MIUR) ha pubblicato il 7 giugno 2012 il regolamento per la  valutazione dei candidati e per le modalità di accertamento della qualificazione dei Commissari, il 27 giugno il bando per i professori che intendono far parte della commissione esaminatrice, il 20 luglio il bando per i candidati. Sia per la selezione dei commissari, sia per la successiva valutazione dei candidati all’idoneità, è stata stabilita la regola del necessario superamento della soglia di merito costituita dalle mediane nazionali di alcuni indicatori di produttività scientifica. A tal fine l’ANVUR con delibera del 21 giugno ha classificato le discipline aziendali tra i settori scientifici cosiddetti “non bibliometrici” nel senso di caratterizzati da indicatori calcolabili tramite informazioni non dispo- nibili su banche dati internazionali ma desunte da liste di pubblicazioni. In particolare l’ANVUR ha scelto di calcolare le mediane per tre indicatori costituiti dal “numero di libri dotati di ISBN”, “numero di articoli su rivista e capitoli di libro dotati di ISBN” e dal “numero di articoli su riviste appartenenti alla classe A”, che in sostanza sono le migliori riviste internazionali per quella disciplina. Tali mediane sono calcolate sulla produzione scientifica degli ultimi dieci anni (dal 2002 al 2011). […]

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Dialogue with standard setters. The conceptual framework for Financial Reporting and Accounting Studies for Capital Market

By | 2017-12-29T17:40:36+01:00 December 27th, 2017|

Azzali Stefano/ Financial Reporting, Riviste / Fascicolo: 4-2012

The International Accounting Standard Board (IASB) and the Financial Accounting Standard Board (FASB) in October 2004 decided to add to their agendas a joint project to develop a common conceptual framework, based on both the existing IASB Framework and the FASB Conceptual Framework. The joint project IASB – FASB related to the Conceptual Framework (CF) for Financial Reporting (FR), that include 8 Phases (Phase A: Objectives and qualitative characteristics; Phase B: Elements and recognition; Phase C: Measurement; Phase D: Reporting entity; Phase E: Presentation and disclosure; Phase F: Purpose and status; Phase G: Application to non-profit entities; Phase H: Remaining issues) in 2010 produced a first document on the objectives and qualitative characteristics (Phase A). Following this document, the IASB published a new version of its CF composed of 4 chapters (1 – The objective of general purpose financial reporting; 2 – The reporting entity; 3 – Qualitative characteristics of useful financial information; 4 – The Framework (1989): the remaining text):as Chapter 2 is not approved and Chapter 4 is the same of the previous version of CF, the paper briefly show the new objective (Chapter 1) and qualitative Characteristics (Chapter 3) of FR and also propose a link between the CF and the classification of Accounting Studies for the Capital Market. In September 2012, IASB and FASB recommended to focus the project on elements of financial statements, measurement, reporting entity, presentation and disclosure and to propose a single discussion paper covering all the areas, rather than separate discussion papers for each area. […]

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Lessons learned from the financial crisis – unveiling alternative approaches within valuation and accounting theory

By | 2017-12-29T17:41:03+01:00 December 27th, 2017|

Brosel Gerrit, Toll Martin, Zimmermann Mario/ Financial Reporting, Riviste / Fascicolo: 4-2012

In the aftermath of the financial crisis, one of the most topical research questions is what caused it. We argue that one of the causes is the insufficient theoretical background employed in most valuation cases. Over the last six decades, there has been constructive debate between the proponents of the various valuation theories. However, the advocates of the Anglo-Saxon valuation theory seem unimpressed by the outcomes, claiming that there is no viable alternative to their preferred theory. Consequently, they cling to unrealistic assumptions like perfect capital markets and pure competition, and thereby deepen the financial crisis by excusing overvaluation. This research presents an alternative, functional business valuation, to assist business valuation. It indicates that knowledge of the functional theory and its application might help prevent similar undesirable developments in the future. Another cause of the financial crisis, tightly connected to the cause mentioned above, lays in the (theoretical) construct of “fair value accounting” and its undesirable pro-cyclical effects. Such effects are generally considered a matter of fact, but have rarely been linked to the neo-classical Anglo-Saxon valuation theory and its major shortcomings until now. A further factor promoting the financial crisis is the assertion that there are no useful alternatives to fair value accounting and its apotheosis to the “mark-to-market approach”. A look into accounting history reveals at least one applicable alternative approach – the “historical cost principle”.

Keywords: Financial crisis, business valuation, fair value accounting, historical cost accounting

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Impression management and legitimacy strategies: The BP case

By | 2017-12-29T17:41:54+01:00 December 27th, 2017|

Michelon Giovanna/ Financial Reporting, Riviste /Fascicolo: 4-2012

The aim of this paper is to study if and how impression management varies during different phases of the legitimation process, in particular during the legitimacy building and legitimacy repairing phases (Suchman, 1995). We aim at understanding whether and how the disclosure tone adopted by a company in the two different moments is diverse and thus functional to the intrinsic objective of the each phase. The empirical analysis focuses on the case of British Petroleum Plc. We investigated the impression management practices undertaken by the company both during the preparation of the rebranding operation, i.e. a situation in which the company is trying to build legitimacy; and during the happenings of two legitimacy crises, like the explosion of the refinery in Texas City and the oil spill in the Gulf of Mexico. The evidence appears in line with the theoretical prediction of legitimacy theory. Results show that while the company tends to privilege image enhancement techniques during the legitimacy-building phase, it uses more obfuscation techniques when managing a legitimacy-repairing process. Moreover, the analysis suggests that the company makes more extensive use of impression management techniques in the disclosures addressed to shareholders, investors and other market operators than in the disclosures addressed to the wide range of other stakeholders.

Keywords: Impression management, disclosure tone, legitimacy building, legitimacy crisis

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Oral financial reporting: A rhetorical analysis of earnings calls

By | 2017-12-29T17:42:24+01:00 December 27th, 2017|

Crawford Carmiciottoli Belinda/ Financial Reporting, Riviste / Fascicolo: 4-2012

Earnings calls are a key form of voluntary financial reporting through which companies seek to proactively engage investors. Although now quite routine, little is known about their rhetorical dimension. Inspired by Aristotlean classical rhetoric, this paper offers an exploratory analysis of the language of a small sample of earnings calls to identify expressions of logos (reason), ethos (credibility) and pathos (emotion). Text analysis software was used to generate descriptive data for follow-up qualitative analysis to interpret strategic usage. Results indicate a strong presence of persuasive language that is skillfully juxtaposed by company executives with financial information to emphasize success and instill confidence. The findings can be applied towards developing state-of-the-art courses for students of financial communication and towards enhancing the effectiveness of financial reporting.

Keywords: Financial reporting, classical rhetoric, earnings calls, corpus linguistics

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Is there such a thing as European Financial Reporting?

By | 2017-12-29T17:42:45+01:00 December 27th, 2017|

Alexander David/ Financial Reporting, Riviste /Fascicolo: 4-2012

I have been invited to write 2000 words about the ‘current existing European accounting situation’, under the general heading of ‘expert’s opinion’. I welcome the opportunity, and propose to concentrate on the ‘opinion’ part rather than the ‘expert’ part. A real academic expert exposition of the ideas would include a very long and detailed bibliography, which is not the ethos I follow here. Rather than select on an ad hoc basis, I give no bibliography at all; the web is available. I believe that financial reporting in Europe, which is not at all the same thing as the ‘European financial reporting’ of my title, is in a mess. I shall support this belief below, in a manner which hopefully will both provoke thought and discussion, and will contribute towards readers’ research agendas. But the root cause of the problems is a failure to provide rigorous theoretical and intellectual analysis of the contexts, needs and objectives of financial reporting. This is a failure by the academic community as a whole. Politicians and bureaucrats (and Eurocrats) are making not only the strategic decisions, which is indeed the prerogative of those we elect (which does not include either bureaucrats or Eurocrats), but many tactical and operational decisions as well. Intellectual dishonesty is rampant, and we as academics have an obligation, and we should have the ability, to expose it. We have largely failed in recent years. To avoid suspense, the answer I give to the title question is ‘No’. Neither the problems I shall outline at national/country level, nor the problems at IASB level, will be alleviated until the validity of this answer is recognised. […]

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Lots done, more to do..

By | 2017-12-29T17:43:19+01:00 December 27th, 2017|

Quagli Alberto/ Financial Reporting, Riviste / Fascicolo: 4-2012

This issue includes some relevant changes, due to Financial Reporting strategic aim to become a real European common ground to debate accounting and financial communication topics. First of all, this issue is the first completely written in English, after the initial “Italian” phase (since 2009). This is a necessary step in order to reach a wider public, both as readers and authors. Secondly, we launched two new sections. The first is “Dialogue with standard setters”, hosting comments and proposals of particular interest for the European accounting context related to the standard setters recent activities. In this number there is a comment to the new framework of the IASB, but in the future we are interested in considering also EU official institution (Parliament, Commission) activities in the financial reporting field. We strongly believe the European financial reporting is a rich context for academic studies. The effect of IFRS mandatory adoption together with the co-existence of different accounting rules for non-listed companies, increasingly differentiated on the basis of the company size, implies a complex accounting structure, with multiple potential objects to study. The persistence of national differences regarding the actual adoption of common standards, national pressures towards the adoption/change of IFRS and/or European rules, the emerging role of non-accounting reporting (e.g., integrated business reporting and sustainability reporting), provide scholars with a unique setting to produce new ideas and to verify the basic assumptions of financial reporting. […]

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Dialogue with standard setters. EFRAG in Academic Research: a Survey

By | 2017-12-29T17:43:44+01:00 December 27th, 2017|

Fiume Raffaele/ Financial Reporting, Riviste / Fascicolo: 1-2013

The European Financial Reporting Advisory Group (EFRAG) was established in 2001 to provide input to the development of accounting standards and to provide the European Commission with technical expertise on Accounting matters. Its main task is to advice to the European Commission before it endorses standards. The key role in the European institutional environment has given to EFRAG a significant capability of influencing the standard setting process conducted by IASB. In a more substantial perspective, the main role of EFRAG is to participate to the development of IFRSs so that they can be endorsed for use in the European Union. A review of EFRAG’s present structure and of the documents it has issued shows that its activity has gone far beyond advising the European Commission and the Accounting Regulation Committee during the endorsement process; EFRAG has also been pursuing a proactive role in its involvement with IASB and IFRIC and in the improvement of accounting directives. In doing this, it has been obtaining a growing interest among institutions, preparers and users, as confirmed by the funding of, and participation in, working groups by these stakeholders. EFRAG’s activities can be intuitively considered relevant for Accounting studies.  Il could be interesting to analyze the “real” influence of EFRAG’s output on accounting rules and practice and the perception of this influence by its stakeholders, starting from European Commission. Moreover, evidences about the interest of Scholars in EFRAG’s activities and about the relevance given to academic research in EFRAG’s action could contribute to a better understanding of the attention EFRAG and Accounting scholars pay each other. […]

Keywords: Intangibles, risks related to intangibles, risk reporting, disclosure, banking sector, content analysis

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