The role of institutions in the process of global convergence to IFRS

By | 2019-09-27T09:28:10+02:00 September 27th, 2019|

Aprile Roberto, Bini Laura / Financial Reporting / 2-2018

This paper uses some major contributions from accounting institutional theory to discuss the process of convergence toward IFRS. Our analysis identifies the most influential institutions and the complex networks of relationships among institutions, offering a valuable contribution to a better understanding of the current state of diffusion of IFRS around the world and the current progress of the convergence process. We identify the different roles of some main institutions, grouping them into three categories and highlighting their main interactions in different contexts. We place global and international institutions such as IOSCO, EU and other international agencies such as the World Bank into the first category, since they have fostered the initial phase of the convergence process. Secondly, we find that the presence of institutions such as local government and standard setters, which play an intermediary role, mediates between the need to guarantee the implementation of the standards and the need to preserve pre-existing equilibria. Finally, we discuss the role played by the end-users of the standards. Our analysis shows that these institutions are the most critical forces. In fact, in the abscence of a structured, led program that orients these forces towards IFRS, the convergence process could result in the proliferation of local systems of standards, increasing the risk that harmonisation is achieved only in name.

IFRS, accounting convergence, institutional theory, isomorphism

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Towards the international convergence of accounting standards: the case of Business Combinations and Goodwill

By | 2017-12-27T14:12:19+01:00 December 27th, 2017|

Olante Maria Elena/ Financial ReportingRiviste /Fascicolo: 2-2014

Accounting for business combinations and for goodwill has profoundly changed during the last ten years both in the US and in Europe, as a consequence of the common effort of the FASB and the IASB towards the international convergence of accounting standards. The Business Combinations project has been the first major project undertaken jointly by the accounting standard setters and it has resulted in the issue of substantially converged accounting standards with some remaining differences. The aim of this paper is to review and comment the evolution and the major changes occurred in accounting for business combinations and for goodwill and their current status in the light of the process of convergence of accounting standards on these crucial economic transactions.

Keywords: Business combinations, goodwill, IFRS, USGAAP



The value relevance of earnings and book value across the EU. A comparative Analysis

By | 2017-12-22T17:52:03+01:00 December 22nd, 2017|

Mechelli Alessandro, Cimini Riccardo/ Financial ReportingRiviste / Fascicolo: 2-2014

This paper aims to investigate whether the value relevance of accounting amounts differs across nations depending on the country characteristics identified by Nobes (2008) and Nobes and Parker (2010) that is the source of funds, the legal system and the fiscal legislation that led them to identify, in the EU, the so-called strong-equity and the weak-equity countries. Because of the different disclosure needs, our hypothesis is that insiders, within the strong-equity countries, disclose more relevant information than in weak-equity countries. To test this hypothesis, we analysed a sample including all the listed entities belonging to the EU at the time of the issuance of EU Regulation 1606/2002. The sample covered the period of 2006-2011 and included 16,513 firm-year observations. Our sample selection strategy allowed us to include entities required to comply with the same accounting standards (IAS/IFRS), so our findings do not depend on differences between requirements of different standard setters. Comparatively, our findings demonstrate that the value relevance of accounting amounts not only is higher in strong-equity countries than in weak-equity countries – validating our research hypothesis – but also that it is not driven by specific firms’ characteristics that are the size, the future growth opportunity and the source of funds of the single entity.

Keywords: Value relevance, weak-equity countries, strong-equity countries, IFRS.



Why Do Firms Write Off Their Goodwill? A Comparison of Different Accounting Systems

By | 2017-12-22T14:50:30+01:00 December 22nd, 2017|

Avallone Francesco, Gabbioneta Claudia, Ramassa Paola, Sorrentino Marco/ Financial ReportingRiviste /Fascicolo: 1-2015

Increased comparability of financial statements across adopting countries is one of the main objectives of IFRS adoption. The level of achievement of this objective, however, is still debatable. While some studies have documented that crosscountry comparability of financial statements has increased after IFRS adoption, other studies have found that comparability has actually decreased since 2005. We contribute to this debate by studying whether the motivations for goodwill writeoff are the same or vary across countries with different accounting systems. Although a good deal of research has investigated the motivations for goodwill writeoff, our study is the first to analyze whether these motivations vary across countries with different accounting systems. We find that firms that expect low cash flows in the future are more likely to report goodwill write-offs if they are located in countries with an Anglo-Saxon accounting system than if they are located in countries with a Continental accounting system. These results suggest that IFRS are “interpreted” differently in different countries and that harmonization of financial statements has not been fully achieved yet.

Keywords: Goodwill, impairment, IFRS, accounting systems

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Concerned about Going Concern: When do Entities in Liquidation have to be Considered a Non-Going Concern According to IFRS?

By | 2017-12-06T12:54:22+01:00 December 6th, 2017|

Hasslinger Marius, Olbrich Michael, Rapp David/ Financial ReportingRiviste / Fascicolo: 1-2017

The rejection of the going concern premise as the underlying assumption of financial statements has far-reaching consequences for accounting. For that reason, it is vitally important to identify the appropriate point in time at which the entity can no longer be regarded as a going concern. Focussing on entities that voluntarily decided to liquidate their operations, the analysis shows that both the IFRS taxonomy and the accounting literature are rather vague on the question of the point in time at which the going concern premise is no longer appropriate. Therefore, we identify the reporting stages that are necessary in the liquidation phase. Contrary to expectations, the paper argues that the going concern assumption should not be immediately abandoned, as retaining it can provide users of financial statements with decisionuseful information. In fact, the paper recommends a value chain based approach. Accordingly, the going concern assumption should not be rejected before the entity has terminated its activities at all stages of its value chain.

Keywords: going concern, liquidation, IFRS, winding-up.

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