Book Review. Nicola Dalla Via, XBRL for Business Reporting: Reference Framework, Network Analysis, and New Trends, FrancoAngeli, 2020
Andrea Tenucci / Financial Reporting / 2-2022
Dialog with standard setters: The impairment test in contexts of socio-economic and financial turbulence
Marco Vulpiani, Simone Chirchiglia, Claudio Rossetti / Financial Reporting / 2-2022
Accounting and Big Data: Trends, opportunities and direction for practitioners and researchers
Gianluca Gabrielli, Alice Medioli, Paolo Andrei / Financial Reporting / 2-2022
Big Data, the Internet of Things and Machine Learning are only today starting to be widely used but are already attracting interest. They can generate a significant impact on business management. This article analyses use and exploitation of Big Data by business management, focusing on its role in reshaping accounting information systems. The Internet of Things and Machine Learning play a key role in obtaining insights and value in this complex world. Like other areas of business, the accounting function is showing growing interest in their possible applications. We analyze, from three perspectives, how big data impacts on the accounting role in supporting managers and decision-making process, also with the aim to define future research lines that scholars could explore. An internal perspective focuses on how big data can impact management accounting; an external perspective focuses on a new dimension of financial accounting and disclosure of information; and a third perspective, the control one, focuses on the impact of big data on internal and external audit procedures.
Minorities’ Representativeness on the Board and their Effect on the Level of Compliance with the Italian RPTs Regulation
Pietro Fera, Rosa Vinciguerra / Financial Reporting / 2-2022
The definition and regulation of related-party transactions (RPTs) depend mainly on the conceptual framework underlying the interpretation of such a phenomenon. While the conflict of interests hypothesis focuses on opportunistic behaviours, the efficient transaction hypothesis suggests that RPTs lead to more efficient. In such a scenario, instead of providing opposite interpretations, the contingency hypothesis considers the potential risks and benefits associated with specific RPTs, i.e. other contex- tual factors and corporate governance mechanisms. Among the latter, independent directors, empowered by the majority of national legislations worldwide, should play a crucial role in spotlighting opportunistic behaviours to the detriment of minorities. However, in light of the many corporate scandals that have stressed the RPTs’ issues, practitioners and academics have questioned their effectiveness, especially in contexts characterized by high ownership concentration, while leaving room for the so-called minority directors, i.e. independent directors appointed by minority shareholders. On this matter, aiming to analyse the potential impact of minority directors on the level of procedural compliance for the RPTs’ implementation, this empirical study, based on a data set, shows that they represent a more effective tool for the full and strict adoption of the current RPTs regulation, while independent directors fail in their monitoring role and are ineffective in bolstering corporate transparency with regard to RPTs.
Does the Adoption of Planning and Control Tools Influence Performance? Opinions of Grantors and Grantees About Non-profit Projects
Giacomo Boesso, Fabrizio Cerbioni, Andrea Menini / Financial Reporting / 2-2022
This study analyzes whether a positive association exists between foundations’ adoption of accounting control tools and the perceived economic and social perfor- mance. Data are collected through a survey addressed to both decision-makers of Italian banking foundations (IBFs) and grantees that received project-related dona- tions from the same IBFs. Results show a positive association between the adoption of selected planning and control tools (i.e., definition of project budget, in-progress monitoring, and utilization of operating performance indicators) and performance. Meanwhile, a second set of more complex tools (i.e., ex-post valuation of activities, direct operative support offered from foundations to their grantees, and social key performance indicators) records a mixed association with social performance and a negative association with economic performance.
Interdisciplinary research by accounting scholars: An exploratory study
Francesco Giovanni Avallone, Alberto Quagli, Paola Ramassa / Financial Reporting / 2-2022
There is a growing consensus around the pivotal role of interdisciplinary research (hereafter IDR) in achieving innovative results and addressing the challenges of modern societies, whose solutions are often beyond the scope of a single discipline. This paper builds on this literature to explore the trends in IDR and its evaluation in research quality assessments in the context of accounting studies by Italian scholars, even in comparison with disciplinary research. This exploratory study covers a dataset of all articles published by Italian accounting scholars in international journals indexed in Scopus from 1985 to 2015 (1,233 articles). We operationalise IDR as diversity in the subject area of journals where the articles are published and diversity in the disciplinary sector of coauthors. Thus, the novelty of this article is that instead of using a single indicator of IDR, we consider the interaction of two alternative perspectives of analysis. The main findings reveal a relevant increase in disciplinary and interdisciplinary articles, with a comparatively smaller increase for IDR. Additionally, we observe that IDR by Italian accounting scholars is strongly oriented towards medical publications. Regarding quality evaluation, the findings show a significantly higher evaluation of disciplinary studies compared to IDR according to the criteria followed by the national assessment exercise (VQR). This explorative study contributes to the debate on IDR in two different ways. On the one hand, our study shows a relatively low growth of IDR in the under-researched context of social sciences in a non-Anglo-Saxon setting, where national research evaluations have stimulated radical changes in the features and outlets of scientific production. On the other hand, our results are consistent with the view that papers with a clear disciplinary focus receive comparatively higher evaluations because the standards established for assessment are usually defined within the discipline.
GAAP-compliant versus non-GAAP voluntary disclosures relative to critical reporting dates
Thomas D’Angelo, Marco Lam, Samir El-Gazzar, Rudolph Jacob / Financial Reporting / 1-2022
Purpose – This paper investigates the impact of generally accepted accounting principles (GAAP) and non-GAAP voluntary disclosures on equity returns for important financial reporting dates. Design/methodology – Using hand-coded archival data, we developed 2,329 matched pairs consisting of non-GAAP (control) and GAAP (treatment) quarterly observations and compared the equity returns for each group around the earnings release and SEC filing dates. Findings – Our findings suggest that the valuation relevance of GAAP disclosing firms significantly exceeds that of non-GAAP firms in the case of earnings and cash flow surprises. These results support the notion that investors perceive GAAP-compliant disclosures as necessary, complementary information about a firm’s performance and equity value. We also reveal that the market revaluation of equity on the earnings release date significantly exceeded that on the SEC filing date. This finding confirms that the more comprehensive disclosure provided by GAAP firms on the earlier date preempted at least some of the information subsequently disclosed on the SEC filing date. Value – Extends the voluntary disclosure literature, in particular the valuation relevance of GAAP versus non-GAAP disclosures. The findings discussed in this paper are of special interest to policymakers and regulators, financial analysts, corporate managers, firm stakeholders, and academics interested in financial re-porting as they continue to study voluntary disclosure rules and practices.
Financial reporting and book-tax conformity: A review of the issues
Luca Menicacci / Financial Reporting / 1-2022
This work reviews accounting research on book-tax conformity (BTC) with specific reference to financial reporting issues. There is an ongoing debate in the accounting literature about the impact of BTC levels (weak/strong) on accounting quality and on tax avoidance. Policymakers have discussed at length the opportunity to reform BTC as well. Proponents of a strong BTC argue that it can deter both financial reporting manipulation and aggressive tax planning by creating contrasting incentives between book earnings maximisation and taxable income minimisation. Further controls on book earnings assured by taxing authorities will reinforce such beneficial effects. Opponents of a strong BTC suggest that financial accounting decisions should not interfere with tax accounting and vice versa, as financial reporting and tax reporting have different purposes. Furthermore, under a strong BTC, managers will tend to smooth earnings to minimise income taxes, thus reducing earnings in-formativeness. Even if a strand of research based on the Tax Reform Act (TRA 86) in the US corroborates the position of opponents, a large body of literature formed in international settings has not yet reached a consensus over the consequences of BTC. This circumstance makes BTC a relevant topic to the current de-bate on financial reporting quality.
The role of the Big Four audit firms and the legal system in non-GAAP comparability
Riccardo Macchioni, Alessandra Allini, Martina Prisco / Financial Reporting / 1-2022
The purpose of this paper is to investigate whether the firms with the same Big Four audit firm and from the same legal system disclose more comparable non-GAAP measures. Using 23,436 pairs of European firms, we hand-collected information on the non-GAAP measures disclosed in the statement of comprehensive income. The results showed that the firms with the same Big Four audit firm or from the same legal system are positively and significantly associated with non-GAAP comparability. Our work adds to the studies on accounting comparability. Furthermore, it provides fresh insights that support the latest IASB activity on the Primary Financial Statement project, under which the standard setter has endorsed ED/2019/7 General Presentation and Disclosures.
The role of Key Performance Indicators as a performance management tool in implementing corporate strategies: A critical review of the literature
Ivo Hristov, Antonio Chirico, Riccardo Camilli / Financial Reporting / 1-2022
Over recent decades, organizations have moved into highly competitive markets that force companies to implement Performance Management Systems (PMSs) to keep monitoring strategy alignment and activities. In this context, this paper provides a Systematic Literature Review (SLR) on the use of Key Performance Indicators (KPIs) in PMSs. Relevant and useful papers have been selected for the analysis and the final 60-paper sample has been studied by means of con-tent analysis and descriptive statistics. The relevant findings have been reported across categories (i.e. value drivers, practices and measures, contextual drivers, and critical issues), such as increasing the use of KPIs supporting sustainable developments and a dichotomy between qualitative and quantitative indicators. In particular, authors revealed the need for a KPI strategical formulation and for a cultural factor aimed at ensuring the effective integration of quantitative, qualitative and sustainable development indicators. Therefore, a conceptual model was developed in order to guide managers through the criticalities and the recently reported requirements. This review addresses the KPIs’ implementation from both a systemic and critical point of view; these aspects made our study really useful for practitioners of all application sectors.