Is risk reporting a possible link between financial and management accounting in private firms?

By | 2022-02-03T12:06:33+01:00 February 3rd, 2022|

Chiara Crovini, Giovanni Ossola / Financial Reporting / 1-2021

This study represents a theoretical analysis with the purpose to continue the discussion on the relationship between management accounting (MA) and financial accounting (FA), by concentrating on the role of risk reporting as a possible manifestation of their convergence. Moreover, the analysis focuses on the private-firm sector as private firms represent the backbone of the economic system of several countries and little is known about financial and non-financial reporting. Drawing on the neo- Durkheimian institutional theory, this paper develops a conceptual framing that considers risk as an embedded element of the business domain and risk reporting as a direct outcome of the convergence between MA and FA in private firms. Furthermore, the neo-Durkheimian institutional theory emphasizes that the owners and managers’ risk attitude is a crucial element affecting risk disclosure, especially in private firms.


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Risk Disclosures in the Annual Reports of Italian Listed Companies

By | 2017-12-27T14:32:37+01:00 December 27th, 2017|

Neri Lorenzo, Russo Antonella/ Financial ReportingRiviste / Fascicolo: 3-2013

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

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The relation between R&D accounting treatment and the risk of the firm: Evidence from the Italian market

By | 2017-12-27T14:15:59+01:00 December 27th, 2017|

Cimini Riccardo, Gaetano Alessandro, Pagani Alessandra/Financial ReportingRiviste / Fascicolo: 1-2014

In this paper, we investigate the relation between the different accounting treatments of R&D expenditures and the risk of the entity in order to identify under which treatment insiders are more likely to carry out earnings management. By analysing the R&D investment strategies of a sample of 137 listed Italian entities that complied with the requirements of IAS 38 during fiscal year 2009, following Lantz and Sahut (2005), we calculate several indexes that show the preferences of insiders to account R&D expenditures as costs or capital assets, and we study the relation of such preferences with the risk of the entity, which we measure with the unlevered beta. We hypothesize that the entities, which considered the R&D investments as costs, are the riskiest ones due to the higher probability that insiders carried out earnings management. Our results confirm such hypothesis. This paper could have implications for academics and standard setters that could learn that behind accounting discretion, insiders could opportunistically behave against outsiders.

Keywords: IAS 38, R&D accounting treatment, risk, earnings management.

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