In recent years, the institutions of the European Union (EU), recognising that small and medium-sized enterprises (or entities; SMEs) play a key role in the EU economic system, have sharpened their political focus on such enterprises and introduced further legislation to support them. In the field of accounting and financial reporting, the European Commission has, since 2009, intensified its efforts to review the accounting directives (78/660/EEC and 83/349/EEC), with the stated fundamental objective of relieving small enterprises and unlisted companies of excessive administrative burdens. The enactment of directive no. 6/2012 (introducing the new size-based category of “micro-entity”) in March 2012 and of the new unified accounting directive no. 34/2013 in June 2013 have been the most recent steps in the review process. “SME accounting” – a shorthand expression for the accounting standardisation that targets unlisted SMEs – has become increasingly relevant recently, in response to rising demand for global standards, especially among developing and emerging economies. SME accounting has thus become a crucial strategic issue for global standard setters. Whereas accounting global standardisation for listed and large companies may seem to be clear and foreseeable (at least in the short– medium term), SME accounting is experiencing an unprecedented evolutionary phase, whose final outcomes are unpredictable. […]
The study examines the relevance of risk reporting in the field of firm voluntary disclosure with an empirical work on Italian listed firms. The motivation of this study is the implementation of the Directive 51/2003/CE in Italy (D.Lgs. 32/2007), a sample of companies listed on the Italian Stock Exchange is selected to investigate the relationship between risk disclosure and company characteristics. This paper explores whether there are significant increases in risk reporting over a period of five years and investigates if risk disclosure is influenced only by new law requirement or also by other possible drivers. A content analysis is performed to obtain a measure of risk narrative disclosure. Then several hypothesis tests are carried out to verify whether there are any corporate differences between companies with different levels of risk disclosure, using univariate and multivariate analysis. Our results on the first question document significant increases in Italian companies’ levels of risk disclosures. We find also that the disclosure is not only determined by the new law requirements but also by other drivers such as company size.
Keywords: Risk, corporate disclosure, risk reporting, content analysis
The paper focuses on the consequences that the metaphorical use of the concept of capital can generate on research on Intellectual Capital. Consequences here analysed refer to: 1) the understanding of IC as being composed of homogenous and separable units; 2) those that are assets; 3) those expected to be under the proprietorship of someone; and 4) those expressible in monetary terms on the balance sheet. The analysis of consequences also offers some insights into overcoming the capital metaphor in favour of a sharper differentiation between the concepts at the basis of the traditional notion of capital, and the ones at the basis of IC.
Keywords: Metaphor, theory of firm, resource-based, view.
Regulating through the “Logic of Appropriateness” and the “Rhetoric of the Expert”: The Role of Consultants in the Case of Intangibles Reporting in Germany
The paper provides some insights into the rationales, processes and actors according to which Intangibles Reporting (IR) has reached a (soft) regulatory stage in the German business context since the mid 2000’s. It draws on the “logic of appropriateness” (March and Olsen, 1992; 1997) combined with the “rhetoric of the expert” (Czarniawska, 1997) in order to examine the documents published in relation to IR. The analysis demonstrates how in Germany this (soft) regulation of reporting of these resources has been mainly realized by a group of management consultants. It is of a particular interest that in the Guidelines they have devised and promoted, the ad hoc organizational figure, the moderator, that has been identified as central for the proposed intangibles reporting does not belong to the accounting domain. This way, the work contributes and expands on previous debates in relation to the “professional jurisdiction” that has made claim throughout the arena of Intangibles by accountants (Napier and Power, 1992; Power, 2006), illustrating an example of an alternative site in which its professionalization and regulation can occur (Cooper and Robson, 2006). Specifically, it is suggested that the actors and the ways in which regulation is created and perpetuated have sometimes to be disentangled from the ones created within the accounting field.
Keywords: Regulation, experts-Consultants, Germany, appropriateness, intangibles
The present paper aims to trace the recent tendencies, in France, around the concept of “actifs immatériels”, including both intangible assets and intellectual capital. In its first part we develop semantic and contextual specificities which might explain the late engagement on such topics by French scholars. The second part is about observed trends and initiatives, some in which the authors were involved. The section has two parts, one on academic and institutional initiatives and the other on corporations and individuals who have entered the field, especially after 2006. The third part comes to critical perspectives on intangibles, leading to a discussion where the broad concept of actifs immatériels provides a framework for understanding economics not only on the company level, but also on the state level. The resulting “dialectic immaterialism” thus provides a relevant rereading of new capitalism.
Keywords: Intangible, assets, capital, immatériels.
This paper documents and compares the perceptions of key functional specialists regarding the contribution of 16 customer relational capital components to value creation and the motivations underlying its external disclosure. Findings of questionnaire surveys to samples of UK listed company marketing directors (who create customer relational capital) and finance directors (who report customer relational capital) are supplemented by follow-up interviews. Marketing directors and finance directors broadly agreed on the relevant importance of the components to value creation. While companies attempted to internally collate information on those components of most value creation importance, there was a lack of correlation between perceived value creation importance and the extent of external disclosure. This suggests that external disclosure is a poor proxy for value creation importance. In terms of disclosure incentives, marketing directors prioritise trust creation among a range of stakeholders whereas finance directors take a more share holder-centric perspective. External disclosure attracts new customers and informs other stakeholders, yet may adversely affect relationships with existing customers and/or breach specific non-disclosure agreements or generic industry restrictions and regulations. Harming competitive position is considered the major disclosure disincentive. In the view of marketing directors, managing the external disclosure of relational capital is akin to balancing on a tightrope.
Keywords: Customer relational capital, intellectual capital, value creation, marketing directors, disclosure.
In recent years one of the most frequently used “buzzwords” is that we live in a knowledge economy. This concept is articulated in a multifaceted number of expressions (e.g. information economy, knowledge-based society, intangible economy, conceptual companies, and so on), which stress differentiated and yet connected aspects. By the same token, a number of studies (e.g. Corrado and Hulten, 2010) has revealed that we are facing a new phase in the evolution of the capitalistic system, where investments on intangibles have overcome those on tangibles. It is evident that the two phenomena are intertwined: the new role and weight of knowledge in the economic system and organisations is likely to be a primary trigger of the role and weight of intangibles therein. Indeed, intangible resources are genetically linked to knowledge. This epochal change in the investment pattern and economic role of knowledge is determining – amid various consequences – a paradigm shift also in the management of organisations and their value drivers. Reputation, research, know-how, brands, skills, procedures, intellectual property, technological capabilities, leadership, customer relationship are all depending on different forms of knowledge, and in the last twenty years they have also become strategic elements for corporate growth. Not surprisingly, companies, national and international institutions, research centers, academic journals have devoted increasing attention to intangibles and their effects on economic systems and agents. […]
I have been invited to provide my view on current issues on European Corporate Governance (CG). I am happy to follow the approach of David Alexander providing his opinion on the question “Is there such a thing as European Financial Reporting?” published in this Journal in the 4th issue of 2012: He proposes to concentrate on the “opinion” rather the “expert” part and does not provide an extensive bibliography. He concludes that financial reporting in Europe – which is not European financial reporting – is in a mess and highlights the (not always convincing) role of us academics in this standard-setting game. At least for the European Union (not Europe, as e.g. Switzerland or Norway should not be ignored) my conclusion seems to be obvious: of course there is nothing like a “European Corporate Governance”. We now have 28 Member States with 28 national company and commercial laws, national and international sets of disclosure rules, codes etc. However, in the last decade we have witnessed the European Commission as a very active standard setter. 2000 words for this article are by far not enough even to briefly describe this. Accordinly, I will concentrate on two recent attempts to change, improve and harmonize corporate governance: The Green Paper “The European corporate governance framework” from April 2011 and the Commission’s “Action Plan: European company law and corporate governance – a modern legal framework for more engaged shareholders and sustainable companies” from December 2012. In the rest of this article, I will use the terms Green Paper and Action Plan. […]
Dialogue with standard setters. Removing ‘reliability’ from the IAS/IFRS framework. The EFRAG’s viewpoint
The IAS/IFRS conceptual framework (CF) describes the basic concepts underlying the preparation and presentation of financial reporting. Its main purpose is to assist the International Accounting Standards Board (IASB) in developing future IFRS and preparers in resolving those accounting issues directly not addressed in the IAS/IFRS, nor in their interpretations. The IAS/IFRS conceptual framework takes the form of a single document issued in 1989 by the IASB and recently (in 2010), substituted with another taking the many changes occurred in both the economic environment and in the management of firms into account. This new document (the 2010 framework) is the result of a complex project that the IASB and US FASB (Financial Accounting Standards Board) began jointly in October 2004 in order to share a common conceptual framework. The project is a part of the Norwalk Agreement signed by these two standard setters in 2002. In it both acknowledged their commitment to the develop highquality and compatible accounting standards. The 2010 framework appears nevertheless incomplete. It is divided into four chapters, concerning the following topics: Chapter 1: The objective of general purpose of financial reporting; Chapter 2: The reporting entity; Chapter 3: Qualitative characteristics of useful financial information; Chapter 4: The Framework (1989): the remaining text. Only the first and the third of these chapters, were completed while the second and the fourth are still in progress. […]
The term “business model” has recently attracted increased attention in the context of financial reporting and was formally introduced into the IFRS literature when IFRS 9 Financial Instruments was published in November 2009. However, IFRS 9 did not fully define the term ‘business model’. Furthermore, the literature on business models is quite diverse. It has been conducted in largely isolated fashion; therefore, no generally accepted definition of ?business model’ has emerged. Therefore, a better understanding of the notion itself should be developed before further investigating its potential role within financial reporting. The aim of this paper is to highlight some of the perceived key themes and to identify other bases for grouping/organizing the literature based on business models. The contributions this paper makes to the literature are twofold: first, it complements previous review papers on business models; second, it contains a clear position on the distinction between the notions of the business model and strategy, which many authors identify as a key element in better explaining and communicating the notion of the business model. In this author’s opinion, the term ‘strategy’ is a dynamic and forward-looking notion, a sort of directional roadmap for future courses of action, whereas, ‘business model’ is a more static notion, reflecting the conceptualisation of the company’s underlying core business logic. The conclusion contains the author’s thoughts on the role of the business model in financial reporting.
Keywords: Business model, literature overview, meaning of the term, strategy