E. Beccalli, Saverio Bozzolan, Enrico Laghi, M. Mattei
Empirical studies consistently provide evidence that investors perceive qualitative disclosures as useful because they have significant effects on analysts' forecast revisions and a firm's share price. But these results leave unanswered the question of whether managers write qualitative disclosures to inform or mislead investors. Based on the signaling theory, we consider two actions by the same manager: one (insider trading) is a costly signal whilst the other (qualitative disclosure) is the cheap signal. We then verify whether they are coherent. We investigate the content and the verbal tone of the Letter of Shareholders and the insider trading from its author before and after the letter's date of release and find that the costly signal (the insider trading) is not coherent with the cheap signal (the disclosure). This finding indicates that managers do not use qualitative disclosures to offer incremental information but that they might use them to mislead investors.
{"title":"Do letters to shareholders inform or mislead? Insights from insider trading","authors":"E. Beccalli, Saverio Bozzolan, Enrico Laghi, M. Mattei","doi":"10.3280/fr2018-002004","DOIUrl":"https://doi.org/10.3280/fr2018-002004","url":null,"abstract":"Empirical studies consistently provide evidence that investors perceive qualitative disclosures as useful because they have significant effects on analysts' forecast revisions and a firm's share price. But these results leave unanswered the question of whether managers write qualitative disclosures to inform or mislead investors. Based on the signaling theory, we consider two actions by the same manager: one (insider trading) is a costly signal whilst the other (qualitative disclosure) is the cheap signal. We then verify whether they are coherent. We investigate the content and the verbal tone of the Letter of Shareholders and the insider trading from its author before and after the letter's date of release and find that the costly signal (the insider trading) is not coherent with the cheap signal (the disclosure). This finding indicates that managers do not use qualitative disclosures to offer incremental information but that they might use them to mislead investors.","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2018-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79423822","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Greetings from the editor: Ten years of personal engagement in Financial Reporting","authors":"Alberto Quagli","doi":"10.3280/fr2018-002001","DOIUrl":"https://doi.org/10.3280/fr2018-002001","url":null,"abstract":"","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2018-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88131393","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Early Years of the Financial Accounting Foundation and the Financial Accounting Standards Board, 1972 to 1980: The “Special Relationship” with the AICPA","authors":"R. J. Swieringa","doi":"10.2308/JFIR-52293","DOIUrl":"https://doi.org/10.2308/JFIR-52293","url":null,"abstract":"","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2018-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86172740","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT This study investigates how those in charge of monitoring nonprofits—donors and boards of directors—react to disclosure of financial reporting problems (accounting errors and internal cont...
本研究探讨了监督非营利组织的捐赠者和董事会对财务报告披露问题(会计错误和内部控制)的反应。
{"title":"Reactions of Nonprofit Monitors to Financial Reporting Problems","authors":"Jeffrey J. Burks","doi":"10.2308/JFIR-52292","DOIUrl":"https://doi.org/10.2308/JFIR-52292","url":null,"abstract":"ABSTRACT This study investigates how those in charge of monitoring nonprofits—donors and boards of directors—react to disclosure of financial reporting problems (accounting errors and internal cont...","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2018-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86209156","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT We examine how the International Accounting Standards Board (IASB) used the Conceptual Framework for Financial Reporting (Framework) in developing the new lease accounting standard Interna...
{"title":"How Does the IASB Use the Conceptual Framework in Developing IFRSs? An Examination of the Development of IFRS 16 Leases","authors":"H. Kabir, A. Rahman","doi":"10.2308/JFIR-52232","DOIUrl":"https://doi.org/10.2308/JFIR-52232","url":null,"abstract":"ABSTRACT We examine how the International Accounting Standards Board (IASB) used the Conceptual Framework for Financial Reporting (Framework) in developing the new lease accounting standard Interna...","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2018-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83154537","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
F. Bava, Melchior Gromis di Trana, Donatella Busso, Piero Pisoni
Following recent corporate scandals increased attention has been paid to Relat-ed Party Transactions (RPTs), since they have often played a central role in abuses and frauds. Regulators have consequently been obliged to strengthen current regu-lations, 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, in-vestigates 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 Regula-tion, which may help lawmakers, after the lengthy initial consultation process, in-evitably 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.
{"title":"Related parties disclosure: Is a risk-based approach more effective?","authors":"F. Bava, Melchior Gromis di Trana, Donatella Busso, Piero Pisoni","doi":"10.3280/FR2018-001001","DOIUrl":"https://doi.org/10.3280/FR2018-001001","url":null,"abstract":"Following recent corporate scandals increased attention has been paid to Relat-ed Party Transactions (RPTs), since they have often played a central role in abuses and frauds. Regulators have consequently been obliged to strengthen current regu-lations, 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, in-vestigates 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 Regula-tion, which may help lawmakers, after the lengthy initial consultation process, in-evitably 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.","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2018-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89544665","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The Italian tradition known as ‘Economia Aziendale’ is longstanding and well known in Italy. It broadly spans the 20th Century, with its apotheosis appearing in the 1920s with Gino Zappa. It is not very well-known elsewhere. Its logical conclusions for financial reporting are not applied in practice in Italy, and indeed never have been. They are not applied in the (very different) field of IFRS and European Directive requirements either. Our research question is to investigate the proposition that they significantly should be so applied. Our key area of study, therefore, is the complex and multi-faceted problem of income measurement and asset valuation, valuation issues in short. In order to properly investigate these considerations, we present a thorough survey of the theoretical development and arguments of the EA tradition, showing its logicality and usefulness, and contrasting these effects with the present-day regulatory systems. This forms the major theoretical element of the paper. In summary, therefore, the paper could be characterised as an analytical presentation of major theoretical arguments, with significant application to the real world of today and tomorrow. The EA tradition is not new. But we demonstrate its current relevance, and expose it to an international audience.
{"title":"A theoretical contribution to 21st Century problems in financial reporting","authors":"D. Alexander, Roberta Fasiello","doi":"10.3280/FR2018-001002","DOIUrl":"https://doi.org/10.3280/FR2018-001002","url":null,"abstract":"The Italian tradition known as ‘Economia Aziendale’ is longstanding and well known in Italy. It broadly spans the 20th Century, with its apotheosis appearing in the 1920s with Gino Zappa. It is not very well-known elsewhere. Its logical conclusions for financial reporting are not applied in practice in Italy, and indeed never have been. They are not applied in the (very different) field of IFRS and European Directive requirements either. Our research question is to investigate the proposition that they significantly should be so applied. Our key area of study, therefore, is the complex and multi-faceted problem of income measurement and asset valuation, valuation issues in short. In order to properly investigate these considerations, we present a thorough survey of the theoretical development and arguments of the EA tradition, showing its logicality and usefulness, and contrasting these effects with the present-day regulatory systems. This forms the major theoretical element of the paper. In summary, therefore, the paper could be characterised as an analytical presentation of major theoretical arguments, with significant application to the real world of today and tomorrow. The EA tradition is not new. But we demonstrate its current relevance, and expose it to an international audience.","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2018-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86036612","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In 1998 Miller, in his paper titled "The margins of accounting" observed that "By looking at the margins of accounting, we can understand how this influential body of expertise is formed and transformed" (Miller, 1998: 618). Drawing on this analogy, the boundaries of reporting and the ways these are defined and re-defined, as a consequence of the relationships organisations form with other entities from time to time, and their substantive nature provide insights about the business and its business model. Accordingly, an examination of reporting boundaries helps to better understand and appreciate the objective of an organisation, the logic that underlies its business model and how that is ‘reflected’ and communicated through the reporting entity’s financial statements - which may or may not align with the boundaries of the ‘organisation’. Despite the relevance of reporting boundaries as a critical aspect of the accounting discipline, it remains a relatively unexplored area in the literature. Accordingly, the aim of this work is to offer an initial overview on how the boundaries of reporting have (not) changed in response to the broadening scope of reporting to address both financial and ‘non-financial’ information (e.g. sustainability, governance and intangibles) and attempts to promote greater integration between both sets of information (IIRC, 2013). In particular, the analysis draws on the interpretative schemes of Zambon (1996) and Zambon and Zan (2000) and is combined with the concept of ‘transplantation’. The manner in which reporting boundaries are defined for both financial and non-financial reporting is investigated and compared. This comparison enables similarities and differences between the definition of the ‘reporting boundary’ to be problematised and explored for both financial and non-financial reporting.
1998年，米勒在他题为“会计的边际”的论文中观察到，“通过观察会计的边际，我们可以理解这个有影响力的专业知识是如何形成和转化的”(米勒，1998:618)。根据这个类比，报告的边界以及定义和重新定义这些边界的方式，作为组织与其他实体不时形成的关系的结果，以及它们的实质性性质，提供了对业务及其业务模式的见解。因此，对报告边界的检查有助于更好地理解和欣赏组织的目标，其商业模式背后的逻辑，以及如何通过报告实体的财务报表“反映”和沟通——这些报表可能与“组织”的边界一致，也可能不一致。尽管报告边界的相关性作为会计学科的一个关键方面，它仍然是一个相对未开发的领域在文献中。因此，本工作的目的是初步概述报告的边界如何(未)改变，以应对报告范围的扩大，以解决财务和“非财务”信息(例如可持续性，治理和无形资产)，并试图促进两组信息之间的更大整合(IIRC, 2013)。特别是，该分析借鉴了Zambon(1996)和Zambon and Zan(2000)的解释方案，并结合了“移植”的概念。对财务报告和非财务报告界定界限的方式进行调查和比较。这种比较使得“报告边界”定义之间的异同可以在财务报告和非财务报告中被质疑和探索。
{"title":"Conceptual shifts in accounting: Transplanting the notion of boundary from financial to non-financial reporting","authors":"Laura Girella, Mario Abela, E. Ferrari","doi":"10.3280/FR2018-001005","DOIUrl":"https://doi.org/10.3280/FR2018-001005","url":null,"abstract":"In 1998 Miller, in his paper titled \"The margins of accounting\" observed that \"By looking at the margins of accounting, we can understand how this influential body of expertise is formed and transformed\" (Miller, 1998: 618). Drawing on this analogy, the boundaries of reporting and the ways these are defined and re-defined, as a consequence of the relationships organisations form with other entities from time to time, and their substantive nature provide insights about the business and its business model. Accordingly, an examination of reporting boundaries helps to better understand and appreciate the objective of an organisation, the logic that underlies its business model and how that is ‘reflected’ and communicated through the reporting entity’s financial statements - which may or may not align with the boundaries of the ‘organisation’. Despite the relevance of reporting boundaries as a critical aspect of the accounting discipline, it remains a relatively unexplored area in the literature. Accordingly, the aim of this work is to offer an initial overview on how the boundaries of reporting have (not) changed in response to the broadening scope of reporting to address both financial and ‘non-financial’ information (e.g. sustainability, governance and intangibles) and attempts to promote greater integration between both sets of information (IIRC, 2013). In particular, the analysis draws on the interpretative schemes of Zambon (1996) and Zambon and Zan (2000) and is combined with the concept of ‘transplantation’. The manner in which reporting boundaries are defined for both financial and non-financial reporting is investigated and compared. This comparison enables similarities and differences between the definition of the ‘reporting boundary’ to be problematised and explored for both financial and non-financial reporting.","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2018-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"91105299","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Nowadays companies are engaged in an increasingly competitive and global arena, where informational imbalances between companies and investors might be seen as a constraint to the correct functioning of markets. Breakdown of infor-mation by segments might be seen as an attempt to intercept different information needs about each circumscribed area of economic activities individually identified within entity-group. This paper is first intended to figure out, by resorting to practical examples, the effects of full management approach on IFRS 8 segment reporting structure. Then, in the light of the state of art arising from IFRS 8 Post-Implementation Review and the latest criticisms, in order to guarantee its useful-ness, it calls for a more awareness of the multi-faceted nature of segment reporting as a planning and control tool. Besides, merit of segment reporting is to recovery subsidiaries data elided within the consolidated financial statements. Following this perspective, separate financial statements, depicting subsidiaries in terms of in-vestments and profits and losses flowing respectively into balance sheet and in-come statements, is bound to provide a synthetic overview of all the business areas occupied by entity-group.
{"title":"Potential of IFRS 8: Managerial \"customization\", relevance of subsidiaries and separate financial statements","authors":"A. Cuccia","doi":"10.3280/FR2018-001004","DOIUrl":"https://doi.org/10.3280/FR2018-001004","url":null,"abstract":"Nowadays companies are engaged in an increasingly competitive and global arena, where informational imbalances between companies and investors might be seen as a constraint to the correct functioning of markets. Breakdown of infor-mation by segments might be seen as an attempt to intercept different information needs about each circumscribed area of economic activities individually identified within entity-group. This paper is first intended to figure out, by resorting to practical examples, the effects of full management approach on IFRS 8 segment reporting structure. Then, in the light of the state of art arising from IFRS 8 Post-Implementation Review and the latest criticisms, in order to guarantee its useful-ness, it calls for a more awareness of the multi-faceted nature of segment reporting as a planning and control tool. Besides, merit of segment reporting is to recovery subsidiaries data elided within the consolidated financial statements. Following this perspective, separate financial statements, depicting subsidiaries in terms of in-vestments and profits and losses flowing respectively into balance sheet and in-come statements, is bound to provide a synthetic overview of all the business areas occupied by entity-group.","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2018-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84822432","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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