Related parties disclosure: Is a risk based approach more effective?

By | 2018-05-28T18:22:36+02:00 May 28th, 2018|

Bava Fabrizio, Gromis di Trana Melchior, Busso Donatella, Pisoni Piero  / Financial Reporting / 1-2018

Following recent corporate scandals increased attention has been paid to Related Party Transactions (RPTs), since they have often played a central role in abuses and frauds. Regulators have consequently been obliged to strengthen current regulations, introducing new bans and requirements aimed at guaranteeing the substantial and economic fairness of RPTs and a proper level of transparency. This reaction is due to the high inherent risk of these transactions and because companies in crisis tend to resort to this type of operation. In Italy, the regulations on RPTs were completely revamped in 2010. The material RPTs that have to be disclosed through an ad hoc communication were defined by former regulations through qualitative criteria, whereas now a quantitative approach is used in order to reduce subjectivity. The initial results of the new regulations show that a higher number of RPTs has been disclosed to the market, thus improving transparency, but the effects of RPTs remain unreported in Income Statements. Through an online questionnaire this paper, starting from previous research, investigates potential improvements supported by independent directors involved in the RPT evaluation process. These independent Directors are uniquely placed to shed light on the experience of the initial years of application of the new Regulation, which may help lawmakers, after the lengthy initial consultation process, inevitably influenced by divergent (and non-independent) interests without the bene-fit of the hindsight that is now available. It is to be hoped that lawmakers will take note of these results and fine-tune the regulations accordingly, without necessarily abandoning the quantitative approach, in order to increase the transparency of the information made available on RPTs.

Related party transactions, Disclosure, IAS 24, Quantitative criteria

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La disclosure sulla corporate governance nei gruppi, strumento di tutela di interessi diffusi. Un’analisi critica nel contesto italiano (Corporate governance, information and control in business groups. A study in the italian context)

By | 2017-12-27T17:57:24+01:00 December 27th, 2017|

Fellegara Anna Maria, Tibiletti Veronica, Marchini Pier Luigi/ Financial Reporting, Riviste / Fascicolo: 1-2011

Nella normativa nazionale, il concetto di gruppo aziendale non è precisamente definito. Di conseguenza, il riconoscimento dei confini di gruppo non è sempre immediato, il che può implicare difficoltà nell’individuazione delle responsabilità delle scelte economiche assunte al suo interno. Tale circostanza può danneggiare gli interessi dei soci di minoranza. Con riferimento a questi temi, in Italia sono state introdotte regole volte a rendere maggiormente trasparenti gli assetti proprietari nei gruppi aziendali. Gli autori si propongono di analizzare qualità ed efficacia della comunicazione in tema di Corporate governance dei gruppi aziendali, con particolare riferimento agli effetti prodotti dalla normativa in materia di direzione e coordinamento di società.

In the Italian legal system, the concept of “business group” is not defined. As a consequence, it could be difficult to define boundaries of the business groups; this absence may cause serious complications in the definition of the responsibilities linked to the economic choices realized by the enterprises of the group. Minority shareholders who would be mostly likely to be damaged by this. In this respect, also in Italy specific rules were introduced to manage the corporate governance of the enterprises. The aim of the present paper is in particular to analyze the quality of disclosure regarding corporate governance in a sample of Italian listed companies and in particular the improvement in disclosure regarding the structure of economic groups brought about the rules regarding “management and control activity”.

Keywords: corporate governance, shareholder’s structure, disclosure, business groups, consolidated financial statement, institutional interests

 

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Analisi di sensitività al tasso di cambio: un’informazione utile per gli investitori? (Informativeness of IFRS 7 sensitivity analysis disclosure on currency risk)

By | 2017-12-27T17:53:07+01:00 December 27th, 2017|

Mattei Marco Maria, Palmucci Fabrizio, Bonetti Pietro/ Financial Reporting, Riviste / Fascicolo: 2-2011

Il lavoro analizza gli effetti dell’entrata in vigore dell’IFRS 7, emanato dallo IASB con lo scopo di aumentare l’informazione sull’esposizione delle imprese ai rischi di mercato. La nostra ricerca indaga l’utilità per gli investitori dell’analisi di sensitività al rischio di tasso di cambio fornita dalle società quotate italiane. I risultati mostrano che prima dell’introduzione dell’IFRS 7 il mercato stimava erroneamente l’esposizione al tasso di cambio, mentre successivamente la sensitività dei rendimenti al tasso di cambio sembra allinearsi con le esposizioni dichiarate. Dall’analisi, inoltre, emerge che l’informazione sull’esposizione riduce la sensitività dei volumi al tasso di cambio. I nostri risultati integrano la letteratura statunitense fornendo evidenze di come un’analisi di sensitività anche backward-looking sia utile al mercato.

Using Italian data, we study the usefulness for investors of the sensitivity analysis disclosures on currency risk mandated by IFRS 7. We hypothesize that the new quantitative disclosures affect both stock returns and trading volume sensitivity to exchange rate changes. Our results show that, before the adoption of IFRS 7, investors wrongly assessed firms’ exposures to currency risk, whereas after the release of the new disclosures the market reaction to exchange rate changes seems to align with the quantitative information provided by firms. Moreover, we find that the IFRS 7 disclosures reduce the trading volume sensitivity to exchange rate changes. Overall, our findings integrate the US literature on the informativeness of quantitative disclosures on market risk and suggest that also a backward-looking disclosure is useful for investors.

Keywords: IFRS 7, rischio di tasso di cambio, rischio di mercato, analisi di sensitività, disclosure

 

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L’avviamento nei bilanci aziendali: impairment test e disclosure

By | 2017-12-27T17:43:40+01:00 December 27th, 2017|

D’Alauro Gabriele/ Financial Reporting, Riviste / Fascicolo: 3-2011

L’applicazione all’avviamento dell’impairment test costituisce uno dei temi maggiormente dibattuti in ambito internazionale, in relazione ai molteplici profili di soggettività insiti nei criteri di valutazione previsti dallo IAS 36 e al conseguente rischio che detta procedura possa costituire un potenziale strumento di politiche di bilancio. Attraverso un’indagine comparata dei bilanci di società quotate italiane e inglesi dal 2005 al 2008, si intende verificare il trattamento contabile dell’avviamento, in particolare nel caso di segnali di perdite di valore, nonché la corrispondente disclosure fornita al riguardo. Nella ricerca sono analizzate le relazioni intercorrenti tra entità della svalutazione dell’avviamento, valutazione dell’azienda riflessa dalle corrispondenti quotazioni di borsa, e grado di disclosure sull’avviamento. Presumendo che la qualità della disclosure esprima il livello di attendibilità con cui si sono applicate le disposizioni dello IAS 36, si verifica l’ipotesi che la mancata effettuazione di svalutazioni, pur in presenza di indicatori di perdite di valore dell’avviamento, conduca le aziende a fornire unadisclosure sull’impairment testnon completa né soddisfacente.

The impairment test of goodwill is a hotly debated issue in the international arena owing to the intrinsic degrees of subjectivity present in the evaluation criteria of IAS 36 and the risk that these assumptions could be used opportunistically by managers. The paper examines a sample of Italian and British consolidated financial statements, referring to the years from 2005 to 2008 particularly with indications of likely impairment, in order to check the accounting treatment of goodwill and its related disclosure. The analysis focuses on the relationship between the magnitude of goodwill writeoffs, market capitalization and disclosure quality. It is suggested that corporate disclosure could act as a yardstick against which the reliability of IAS 36 implementation by management can be measured. It follows, therefore, that no write-offs represents an insufficient level of mandatory disclosure about goodwill impairment.

Keywords: goodwill, IAS 36, impairment test, earnings management, write-offs, disclosure

 

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Cambiamenti di cash generating unit e valutazione dell’avviamento

By | 2017-12-29T17:35:04+01:00 December 27th, 2017|

D’Alauro Gabriele/ Financial Reporting, Riviste / Fascicolo: 2-2012

Il presente contributo esamina gli effetti delle variazioni di cash generating unit (CGU) sull’entità delle svalutazioni dell’avviamento, attraverso un’indagine comparata di bilanci di società quotate italiane e inglesi. Avendo riguardo alla procedura di impairment test prevista dallo IAS 36, si assume che le modifiche di CGU, ove ritenute “non giustificate”, ovvero non riconducibili a business combinations o a motivate riorganizzazioni interne, possano rivelare politiche di earnings management. In detto contesto si verifica l’ipotesi che un incremento o un decremento non giustificato del numero di CGU, cui l’avviamento risulta allocato, sia associato ad una svalutazione dell’avviamento rispettivamente maggiore o minore rispetto a quella del periodo precedente. I risultati della ricerca, in coerenza con gli assunti propri della teoria dell’earnings management, confermano che i profili di soggettività insiti nella procedura di impairment possono essere utilizzati dai managers in modo opportunistico.

This paper examines whether changes in cash generating units (CGUs) affect the magnitude of goodwill write-offs, with reference to the impact of IAS 36 on a sample of Italian and British firms. As regards an accounting regulation that allows significant unverifiable estimates whilst at the same time one that requires a high level of disclosure, the paper proposes that an unjustified change in the specific CGUs to which each goodwill has to be allocated could reveal earnings management. The change is defined “unjustified” if there is not a business combination which has caused the change or if the internal reorganization is not adequately disclosed. In this context, it is assumed that an unjustified increase in the number of CGUs to which goodwill is allocated will cause higher goodwill write-offs than those recorded in the previous period. On the other hand, it is hypothesized that an unjustified decrease in the num- ber of CGUs is associated to non-impairment or to goodwill write-offs lower than in the previous period. The empirical results confirm the two hypotheses, in both the Italian and British samples. These findings are consistent with earnings management theory insights, suggesting that the profiles of subjectivity inherent in impairment test assumptions could be used opportunistically by managers.

Keywords: Cash Generating Units, goodwill, impairment test, earnings management, write-offs, disclosure

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Accounting e reporting dei diritti di emissione. Modelli di rilevazione proposti e pratiche emergenti

By | 2017-12-29T17:37:57+01:00 December 27th, 2017|

Tarquinio Lara/ Financial Reporting, Riviste / Fascicolo: 3-2012

Il presente lavoro esamina le principali implicazioni dell’Emission Trading Scheme Europeo (EU ETS) sul sistema di accounting e reporting delle imprese e verifica l’influenza di alcune variabili sulla disclosure delle informazioni sui diritti di emissione e sul climate change. Lo studio ha ad oggetto un campione di imprese che gestiscono impianti termoelettrici cogenerativi e non cogenerativi e prende in esame le informazioni che queste forniscono in merito ai diritti di emissione nei bilanci 2009; nei documenti che corredano i bilanci (in particolare la relazione sulla gestione); nei rendiconti di sostenibilità 2009 redatti sulla base delle linee guida GRI/G3. I principali risultati conseguiti segnalano la presenza di alcune significative uniformità nei criteri di contabilizzazione adottati dalle imprese e dimostrano che la redazione di un bilancio di sostenibilità influenza il livello di disclosure.

The objectives of this study are to investigate the most important effects of the European Emission Trading Scheme (EU ETS) on corporate accounting and reporting o analyse how certain variables influence the disclosure of emission rights and climate change. The study is based on disclosures made in Annual Reports both in the Financial Review by Management and in Sustainability Reports (2009) of a sample of companies that manage cogenerative and non-cogenerative thermo-electrical plants. The results have shown interesting uniform methods of accounting used by com-panies included in the analysis and the influence played by sustainability reports on the disclosure level.

Keywords: Emission rights, accounting, disclosure, climate change, EU ETS

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I compensi agli amministratori: analisi della disclosure nei Bilanci delle società italiane quotate

By | 2017-12-29T17:38:29+01:00 December 27th, 2017|

Giorgino Maria Cleofe, Paris Anna, Paternostro Sergio/Financial Reporting, Riviste / Fascicolo: 3-2012

Il presente contributo intende analizzare la disclosure relativa alla remunerazione percepita dagli amministratori, il cui ruolo di primo piano nel definire le sorti di un’azienda rende l’informativa ad essi correlata di particolare interesse per i diversi stakeholder. Obiettivo degli autori è quello di indagare nei documenti ufficiali (relativi all’esercizio 2009) delle 50 società italiane quotate maggiormente capitalizzate, al fine di verificare il livello di informativa obbligatoria e/o volontaria ivi fornita in merito ai compensi percepiti dai rispettivi amministratori. Le risultanze emerse saranno sintetizzate in un disclosure index di cui sarà valutata l’eventuale correlazione con alcuni parametri, selezionati in base a specifiche ipotesi di ricerca, inerenti alla struttura del board e alla dimensione aziendale.

This paper analyses the disclosure on the directors’ remuneration, whose primary role in a company, makes their information of particular interest to different stakeholders. The authors’ aim is to investigate the official documents (for 2009) of the 50 most capitalized listed Italian companies, in order to verify the compulsory and/or voluntary disclosure provided about the remuneration paid to their directors. The findings will be summarized in a disclosure index whose correlation with some parameters (selected on the basis of specific research hypothesis) concerning board structure and company size will be assessed.

Keywords: Disclosure, directors, remuneration, Financial Statement, Corporate Governance Report, listed Italian companies

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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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An exploratory study of intangibles risk disclosure in annual reports of banking companies from the UK, US, Germany and Italy – Some descriptive insights

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

Durst Susanne/ Financial Reporting, Riviste / Fascicolo: 1-2013

Intangibles are viewed as the key drivers in most industries, and current research shows that firms voluntarily disclose information about their investments in intangibles and their potential benefits. Yet little is known of the risks relating to such resources and the disclosures firms make about such risks. In order to obtain a more balanced and complete picture of firms’ activities, information about the risky side of their intangibles is also needed. This exploratory study provides some descriptive insights into intangibles-related risk disclosure in a sample of 16 large banks from the United States (US), United Kingdom (UK), Germany and Italy. Annual report data is analyzed using the three Intellectual Capital dimensions. Study findings illustrate the variety of intangibles-related risk disclosure as demonstrated by the banks involved.

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

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