Dialogue with standard setters. Climate change and Financial reporting
Giulia Cordero di Montezemolo, Matteo Strada / Financial Reporting / 1-2022
Book Review. Lorenzo Simoni, Business Models and Corporate Reporting: Defining the Platform to Illustrate Value Creation, Routledge, 2022
Sam Rawsthorne / Financial Reporting / 1-2022
Dialogue with standard setters. COVID-19: The impact on IFRS Financial Reporting
Alberto Quagli, Paola Ramassa, Marco Venuti / Financial Reporting / 2-2021
Integrated reporting: Much ado about nothing?
Brigitte de Graaff, Bert Steens, Kees Camfferman / Financial Reporting / 2-2021
Integrated reporting, which helps companies to share their value creation processes with their stakeholders, has developed rapidly in recent years. Due to the increased attention paid to the International Integrated Reporting Framework is-sued by the International Integrated Reporting Council, the number of companies worldwide engaging in integrated reporting is continually rising, which is presumably driven by the claimed benefits of this practice. Through recourse to legitimacy theory and management fashion theory, here we provide a preliminary assessment of the development of integrated reporting, alongside considering the potential influence of academic research in its growth. We review the existing body of academic literature on this topic, ultimately identifying 123 claims about the benefits of IR from 29 papers published in 15 journals between May 2011 and September 2016, before proceeding to analyse both the sources and the level of substantiation of these claims. Our findings suggest that only a few of the purported ad-vantages of integrated reporting are supported by actual empirical evidence, while most of the claims only cite a limited number of primary sources. Based on these results and our assessment of the development of the concept of IR, we propose a future research agenda.
Improving business model disclosure in the annual report: Insights from an interventionist research project
Carlo Bagnoli, Antonio Costantini, Maurizio Massaro / Financial Reporting / 2-2021
Responding to the calls for empirical research on the extent and nature of business model reporting, this paper has the purpose to assess the quality of business model disclosure. To accomplish this purpose, the study takes advantage of an interventionist research project that was conducted in an Italian listed company operating in the information technology industry to investigate how the business model was disclosed in the annual report and provide feedback to support possible changes. The study uses a framework of analysis that helped to assess the quality of business model disclosure in terms of three attributes: amount, spread and connectivity. The annual report of two consecutive fiscal years was analyzed. The study mainly shows that the measurement and assessment of BM disclosure quality can facilitate its improvement. The analysis enabled meaningful in-sights on BM’s quality to emerge, delivering evidence on the relative importance, coverage and interconnections of BM’s disclosed components. Further, the interventionist approach helped to shape managers’ view on how to tackle disclosure issues and offer more effective communication of the BM according to the company purposes..
Non-financial disclosure and women on board: Is a mandatory approach on gender quotas effective to increase communication quality?
Rebecca Miccini / Financial Reporting / 2-2021
The present study investigates the effects of women on companies’ boards on the quality of non-financial information, and the influence that a mandatory approach has on this relationship. Previous studies have dealt with analysing the effects of female presence on CSR or ESG information, but few pieces of research have taken into account other strands of non-financial information and have re-sorted to an index to measure its quality. Therefore, this study aims to contribute by extending the analysis to any type of non-financial information communicated by a company. Moreover, the present research contributes to the strand of literature investigating the role of women on companies’ boards. In fact, the results of the OLS regression analysis demonstrated that the presence of women with an executive role positively influences the quality of disclosure in Italy, and this relationship is not influenced by the advanced stage of application of the regulation on gender quotas. Moreover, disclosure quality is significantly higher for firms that disclose a non-financial statement. Nevertheless, the study suffers from some limitations with respect to the sample size and the analysis of the trend in reporting after the introduction of Directive 2014/95/EU.
The assurance of non-financial disclosure: A longitudinal analysis of the academic and professional literature
Michele Guidi, Marco Giuliani, Maria Serena Chiucchi, Stefano Marasca
/ Financial Reporting / 2-2021
Various studies argue that non-financial information is particularly relevant for business stakeholders. To reduce the risks related to information asymmetries and “window dressing” practices and to enhance the credibility of non-financial information, the need for assurance has arisen. In recent years, scientific and professional interest in the issues related to the assurance of non-financial information has increased. Up to now, there have been very few studies on the evolution of non-financial disclosure (NFD) assurance, nor have scholars addressed the possible gaps and future research perspectives in this field. A systematic review is developed with the following aims: first, to explore the evolution of the NFD assurance literature by systematising academic studies (i.e., papers published in scientific journals) and professional contributions (i.e., papers published in non-scientific sources) from the auditing field, and second, to understand whether theory and practice have influenced each other in the field of NFD assurance, i.e., whether a bridge between theory and practice can be identified within this discourse. The main findings are the following: firstly, four stages can be identified in the evolution of the study of NFD assurance, and secondly, there is virtually no interaction between theory and practice, as practically no scientific papers are mentioned in professional papers, while academic scholars consider professional publications only as empirical data sources.
Dialogue with standard setters. The IASB proposals on the recognition of regulatory assets and regulatory liabilities in the IFRS financial statements
Alessio Acunzo, Leo Van der Tas / Financial Reporting / 1-2021
The complexity in measuring M&A performance: Is a multi-dimensional approach enough?
Elisa Roncagliolo, Francesco Avallone / Financial Reporting / 1-2021
M&A are complex corporate events involving two or more companies and often requiring relevant efforts in order to be successful. For these reasons, both scholars and practitioners are interested in assessing the success rate of M&A and measuring their influence on the corporate performance. Despite the complexity of the M&A phenomenon, previous studies that empirically examine this issue according to an accounting-based perspective, largely adopt single performance measures. Therefore, our study aims to explore whether the use of a multi-dimensional approach in the development of accounting-based performance measures could provide a comprehensive examination of the change in corporate performance due to complex events, such as M&A. In particular, this study assesses the performance of M&A concluded in the European context through the development of multiple accounting-based performance indicators that examine: (i) profitability, (ii) growth, and (iii) financial situation. In addition, we analyse a crucial performance dimension, the cost of employment, which has received limited attention from previous empirical research. Consistently with the multifaceted nature of M&A, results indicate that they provide a mixed impact on different performance measures. Therefore, main findings suggest that the measurement of M&A performance should take into consideration different contextual features.
Bridge over troubled water: Is it possible to define other comprehensive income?
Thomas Ryttersgaard / Financial Reporting / 1-2021
Although other comprehensive income did not exist in the conceptual framework until 2018, it has been a part of IFRS for many years, and it has not been defined based on accounting theory. This paper considers arguments for the current use of other comprehensive income under IFRS and finds that matching and prudence are at the core of other comprehensive income in IFRS despite not being elements of the conceptual framework. This suggests that the concept of other comprehensive income exists because the IFRS standards are founded on a mix of balance sheet-based and income statement-based accounting principles. Based on the characteristics of other comprehensive income and the IASB’s arguments for the recognition of gains and losses in other comprehensive income, this paper proposes a definition of other comprehensive income that can be used to ensure a uniform application of the concept across accounting standards and to reduce risks of inconsistency.