G. Martino, Grazia Dicuonzo, A. Vitelli, Vittorio Dell’Atti
Using a sample of European listed companies between 2014 and 2017, we ex-a¬mine accounting factors that lead management to capitalize R&D costs, with a specific focus on the tax incentives in the form of government grants. In our analysis, we distinguish between companies which capitalize R&D costs ("capitalizers") and companies which expense R&D costs ("expensers"). The evidence shows that the choice to capitalize R&D costs is positively related to the recognition of grants as revenue. We also investigate the value relevance of tax incentives related to R&D expenditures. Our empirical findings show that investors draw a distinction between government grants associated with research costs (EXP) and those asso-ciated with development costs (CAP). This paper presents both theoretical and practical implications. It contributes to the current debate on expensing or capital-izing R&D costs through a study of tax incentives received by companies for their research activity. Moreover, it offers empirical evidence on the use of R&D cost capitalization for purposes of tax incentives, which can be utilized by standard set-ters to assess opportunistic behaviors adopted by companies.
{"title":"Are tax incentives determinant and relevant for capitalizing R&D expenditures? Evidence from Europe","authors":"G. Martino, Grazia Dicuonzo, A. Vitelli, Vittorio Dell’Atti","doi":"10.3280/fr2020-002003","DOIUrl":"https://doi.org/10.3280/fr2020-002003","url":null,"abstract":"Using a sample of European listed companies between 2014 and 2017, we ex-a¬mine accounting factors that lead management to capitalize R&D costs, with a specific focus on the tax incentives in the form of government grants. In our analysis, we distinguish between companies which capitalize R&D costs (\"capitalizers\") and companies which expense R&D costs (\"expensers\"). The evidence shows that the choice to capitalize R&D costs is positively related to the recognition of grants as revenue. We also investigate the value relevance of tax incentives related to R&D expenditures. Our empirical findings show that investors draw a distinction between government grants associated with research costs (EXP) and those asso-ciated with development costs (CAP). This paper presents both theoretical and practical implications. It contributes to the current debate on expensing or capital-izing R&D costs through a study of tax incentives received by companies for their research activity. Moreover, it offers empirical evidence on the use of R&D cost capitalization for purposes of tax incentives, which can be utilized by standard set-ters to assess opportunistic behaviors adopted by companies.","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2020-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89726812","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 assessment of the organisation's ability to create value over time through its human capital (HC) is crucial for every business. Several definitions of HC ex-ist, quite ambiguous and not unique. This fuzziness is impacting, in turn, the busi-ness practice. This study is grounded on the concept of HC, as defined by the Inte-grated Reporting (IR) and it is focused on testing the self-identification of HR managers with the IR definition. With this work, authors want to question the in-clusivity of the definition of HC, as well as, its practical suitability, recurring to a theoretical framework called dialogic-polylogic accounting. A first exploration of the HC definition from the IR framework has been con-ducted, representing the cause-effect links and some reflections on its semantics. Furthermore, the opinion of a purposive sample of key informants HR managers is explored through a qualitative content analysis on 19 semi-structured interviews. Such key informants have a first-hand knowledge about the community of Italian HR managers, and they have no experience in IR representing the voice of ex-cluded, but potential users. Despite an initial sympathetic reaction, the HC practi-tioners stressed an excessive technical rigidity in IR definition, quite distant from their field experience on HC.
{"title":"Does the Integrated Reporting's definition of human capital fit with the HR manager's perspective?","authors":"M. Cisi, F. Centrone, Laura Corazza","doi":"10.3280/FR2020-002001","DOIUrl":"https://doi.org/10.3280/FR2020-002001","url":null,"abstract":"The assessment of the organisation's ability to create value over time through its human capital (HC) is crucial for every business. Several definitions of HC ex-ist, quite ambiguous and not unique. This fuzziness is impacting, in turn, the busi-ness practice. This study is grounded on the concept of HC, as defined by the Inte-grated Reporting (IR) and it is focused on testing the self-identification of HR managers with the IR definition. With this work, authors want to question the in-clusivity of the definition of HC, as well as, its practical suitability, recurring to a theoretical framework called dialogic-polylogic accounting. A first exploration of the HC definition from the IR framework has been con-ducted, representing the cause-effect links and some reflections on its semantics. Furthermore, the opinion of a purposive sample of key informants HR managers is explored through a qualitative content analysis on 19 semi-structured interviews. Such key informants have a first-hand knowledge about the community of Italian HR managers, and they have no experience in IR representing the voice of ex-cluded, but potential users. Despite an initial sympathetic reaction, the HC practi-tioners stressed an excessive technical rigidity in IR definition, quite distant from their field experience on HC.","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2020-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80403200","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}
This paper aims at exploring how corporate members involved in integrated re-port (IR) preparation assess the reliability of Big Data as a new source of infor-mation. It investigates IR preparation within a company operating in the Italian banking industry that has adopted Big Data since 2015. Using the epistemic au-thority lens (Kruglanski et al., 2005), this study reveals how corporate members draw mainly on their professional background and the Big Data-related initiatives to define the extent to which Big Data contributes to IR preparation, with educa-tional background and corporate circumstances playing a less incisive part. Con-structing performance indicators, identifying prospective information to contrast criminal phenomena and lending support to relational sustainability all act as in-formational and motivational factors that lead members to rely on Big Data while preparing the IR. The paper contributes to the infant literature on Big Data in cor-porate reporting by offering early practical insights into how Big Data informs IR preparation. It also provides evidence of a necessary intertwining between ac-counting-based knowledge and training initiatives on advanced analytics to fully exploit Big Data in IR preparation.
本文旨在探讨参与综合报告(IR)准备的企业成员如何评估大数据作为新信息来源的可靠性。它调查了一家在意大利银行业运营的公司的IR准备工作，该公司自2015年以来一直采用大数据。利用认知权威视角(Kruglanski et al.， 2005)，本研究揭示了企业成员如何主要利用其专业背景和与大数据相关的举措来定义大数据对IR准备的贡献程度，而教育背景和企业环境发挥的作用则不那么深刻。构建绩效指标，识别潜在信息以对比犯罪现象，并为关系可持续性提供支持，这些都是导致成员在准备IR时依赖大数据的信息和激励因素。本文通过提供关于大数据如何影响IR准备的早期实践见解，为企业报告中的大数据方面的初步文献做出了贡献。它还提供了基于会计核算的知识与高级分析培训计划之间必要的交织的证据，以充分利用大数据在IR准备中。
{"title":"Integrated reporting and the epistemic authority of Big Data: An exploratory study from the banking industry","authors":"Alice Francesca Sproviero","doi":"10.3280/fr2020-002004","DOIUrl":"https://doi.org/10.3280/fr2020-002004","url":null,"abstract":"This paper aims at exploring how corporate members involved in integrated re-port (IR) preparation assess the reliability of Big Data as a new source of infor-mation. It investigates IR preparation within a company operating in the Italian banking industry that has adopted Big Data since 2015. Using the epistemic au-thority lens (Kruglanski et al., 2005), this study reveals how corporate members draw mainly on their professional background and the Big Data-related initiatives to define the extent to which Big Data contributes to IR preparation, with educa-tional background and corporate circumstances playing a less incisive part. Con-structing performance indicators, identifying prospective information to contrast criminal phenomena and lending support to relational sustainability all act as in-formational and motivational factors that lead members to rely on Big Data while preparing the IR. The paper contributes to the infant literature on Big Data in cor-porate reporting by offering early practical insights into how Big Data informs IR preparation. It also provides evidence of a necessary intertwining between ac-counting-based knowledge and training initiatives on advanced analytics to fully exploit Big Data in IR preparation.","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2020-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83725852","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 aim of this paper is to identify criticisms of the Balanced Scorecard (BSC) and create a new model that is more adequate for business performance, thus providing researchers and practitioners with a way to manage critical issues con-nected to the BSC. To this end, we devote our attention to two main research ques-tions: (1) What are the main critical dimensions in the existing studies on BSC? (2) How could the structure of the BSC be modified in order to take into account its critical dimensions? Accordingly, we review articles published in 429 journals, in 22 different subject areas of the Chartered Association of Business Schools' Academ-ic Guide (ABS). We examine a total of 342 papers and obtain 102 relevant papers that focus on criticism of the BSC. Thanks to the information obtained from a survey and interviews conducted with managers of Italian companies, we create an adjusted BSC (ABSC) that allow us to consider the critical aspects from a new perspective, named the critical perspective. The conceptual model is developed in three dimensions (conceptual, structural and environmental). Research findings suggest that considering the critical perspective makes it possible to build the ABSC, making this management tool more accessible and useful for businesses.
{"title":"A critical approach to BSC studies: State of art, critical issues and future trends","authors":"I. Hristov, A. Chirico","doi":"10.3280/fr2020-001002","DOIUrl":"https://doi.org/10.3280/fr2020-001002","url":null,"abstract":"The aim of this paper is to identify criticisms of the Balanced Scorecard (BSC) and create a new model that is more adequate for business performance, thus providing researchers and practitioners with a way to manage critical issues con-nected to the BSC. To this end, we devote our attention to two main research ques-tions: (1) What are the main critical dimensions in the existing studies on BSC? (2) How could the structure of the BSC be modified in order to take into account its critical dimensions? Accordingly, we review articles published in 429 journals, in 22 different subject areas of the Chartered Association of Business Schools' Academ-ic Guide (ABS). We examine a total of 342 papers and obtain 102 relevant papers that focus on criticism of the BSC. Thanks to the information obtained from a survey and interviews conducted with managers of Italian companies, we create an adjusted BSC (ABSC) that allow us to consider the critical aspects from a new perspective, named the critical perspective. The conceptual model is developed in three dimensions (conceptual, structural and environmental). Research findings suggest that considering the critical perspective makes it possible to build the ABSC, making this management tool more accessible and useful for businesses.","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2020-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88307552","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 COVID-19 outbreak has impacted significantly on the movements of goods and people through the world causing interruptions at many levels in the financial and industrial environment with a significant impact on financial reporting. The purpose of the following review is to analyse some of the main accounting implications of the outbreak in the IFRS financial statements and the first responses at international level by the standard-setters. In the first part, the analysis will be focused first on the main implications for periods ended on 31 December 2019 and then on the effects for the 2020 reporting periods onward. As per 2008 global financial crisis (GFC), that began in 2007 with a depreciation in the subprime mortgage market in the United States, the main international standard-setters (IASB and FASB) has proposed amendments of the standards to react to some implications of the COVID-19 pandemic. In the second part of this review will be summarised the main responses, including the documents and proposed amendments issued by the IASB regard-ing IFRS 16 Leases accounting for lease concessions related to the effects of the COVID-19 pandemic.
{"title":"Dialogue with standard setters. Potential impacts of the COVID-19 on IFRS financial statements","authors":"Raffaele Fiume, T. Onesti, Stefano Bianchi","doi":"10.3280/fr2020-001005","DOIUrl":"https://doi.org/10.3280/fr2020-001005","url":null,"abstract":"The COVID-19 outbreak has impacted significantly on the movements of goods and people through the world causing interruptions at many levels in the financial and industrial environment with a significant impact on financial reporting. The purpose of the following review is to analyse some of the main accounting implications of the outbreak in the IFRS financial statements and the first responses at international level by the standard-setters. In the first part, the analysis will be focused first on the main implications for periods ended on 31 December 2019 and then on the effects for the 2020 reporting periods onward. As per 2008 global financial crisis (GFC), that began in 2007 with a depreciation in the subprime mortgage market in the United States, the main international standard-setters (IASB and FASB) has proposed amendments of the standards to react to some implications of the COVID-19 pandemic. In the second part of this review will be summarised the main responses, including the documents and proposed amendments issued by the IASB regard-ing IFRS 16 Leases accounting for lease concessions related to the effects of the COVID-19 pandemic.","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2020-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87019503","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}
One of the major sources of inefficiencies in M&A transactions is the asymmetry of information between the bidder and the target. Several disclosure strategies are used by bidders to convince target shareholders to tender their shares but also to convince their own shareholders about the value of the proposed deal. Target managers also try to communicate to their shareholders their appreciation of the offer. To add credibility to this communication, experts are often called on to express an independent opinion on the offer price, in a document called the Fairness Opinion (FO). While FOs have been found to have no effect on deal efficiency in the US, this study re-examines the issue by considering the actual content of the document, in terms of the valuation process that leads to the expert opinion, in the context of Italian M&As where FOs are mostly voluntary and often provide detailed information about target valuation. The results show that even in a setting where weak enforcement of disclosure regulations allows bidders and targets to choose the level and detail of disclosure, the quality of the content of FO has only a weak association with the performance of the deal, both in terms of bidder announcement returns and of post-deal market and operating performance.
{"title":"The information content of Fairness Opinions in M&A: Evidence from Italy","authors":"Lucie Courteau","doi":"10.3280/fr2020-001001","DOIUrl":"https://doi.org/10.3280/fr2020-001001","url":null,"abstract":"One of the major sources of inefficiencies in M&A transactions is the asymmetry of information between the bidder and the target. Several disclosure strategies are used by bidders to convince target shareholders to tender their shares but also to convince their own shareholders about the value of the proposed deal. Target managers also try to communicate to their shareholders their appreciation of the offer. To add credibility to this communication, experts are often called on to express an independent opinion on the offer price, in a document called the Fairness Opinion (FO). While FOs have been found to have no effect on deal efficiency in the US, this study re-examines the issue by considering the actual content of the document, in terms of the valuation process that leads to the expert opinion, in the context of Italian M&As where FOs are mostly voluntary and often provide detailed information about target valuation. The results show that even in a setting where weak enforcement of disclosure regulations allows bidders and targets to choose the level and detail of disclosure, the quality of the content of FO has only a weak association with the performance of the deal, both in terms of bidder announcement returns and of post-deal market and operating performance.","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2020-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75760763","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}
This paper analyses how financial reporting enforcement varies across 17 Eu-ropean countries and the extent to which enforcement indices used in the existing accounting literature capture this enforcement. Based on survey responses from European enforcement bodies and regulatory specialists, the study finds extensive variations in financial reporting enforcement across the European countries. Fur-thermore, enforcement indices used in the accounting literature do not appear to capture financial reporting enforcement. These findings should be of interest to ESMA and other enforcement bodies as well as for the use of enforcement indices in accounting research.
{"title":"European Financial Reporting Enforcement: Analysis of Practices and Indices","authors":"T. Johansen, C. Olsen, Thomas Plenborg","doi":"10.3280/fr2020-001003","DOIUrl":"https://doi.org/10.3280/fr2020-001003","url":null,"abstract":"This paper analyses how financial reporting enforcement varies across 17 Eu-ropean countries and the extent to which enforcement indices used in the existing accounting literature capture this enforcement. Based on survey responses from European enforcement bodies and regulatory specialists, the study finds extensive variations in financial reporting enforcement across the European countries. Fur-thermore, enforcement indices used in the accounting literature do not appear to capture financial reporting enforcement. These findings should be of interest to ESMA and other enforcement bodies as well as for the use of enforcement indices in accounting research.","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2020-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78556516","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 first-time adoption of International Financial Reporting Standard (IFRS) 9 at the beginning of fiscal year 2018 has offered the opportunity to test whether the information provided by this new accounting standard on financial instruments is more useful for investors than International Accounting Standard (IAS) 39. This paper assesses and compares the value relevance of book value calculated ac-cording to the requirements of the two accounting standards on financial instru-ments at the beginning of the transition year for a sample of 110 financial entities listed in 20 stock markets that have recorded transition effects between retained earnings. Findings provide evidence that both IAS 39 and IFRS 9 are value rele-vant and that the second one adds more information than that previously supplied by the first one. The paper contributes to the literature by providing the first evi-dence of the usefulness of the new accounting standard on financial instruments. About its practical implications, the paper provides insights regarding the high quality of the International Accounting Standard Board (IASB)'s standard setting process.
{"title":"Is IFRS 9 better than IAS 39 for investors' decisions? Evidence from the European context at the beginning of the transition year","authors":"A. Mechelli, V. Sforza, Riccardo Cimini","doi":"10.3280/fr2020-001004","DOIUrl":"https://doi.org/10.3280/fr2020-001004","url":null,"abstract":"The first-time adoption of International Financial Reporting Standard (IFRS) 9 at the beginning of fiscal year 2018 has offered the opportunity to test whether the information provided by this new accounting standard on financial instruments is more useful for investors than International Accounting Standard (IAS) 39. This paper assesses and compares the value relevance of book value calculated ac-cording to the requirements of the two accounting standards on financial instru-ments at the beginning of the transition year for a sample of 110 financial entities listed in 20 stock markets that have recorded transition effects between retained earnings. Findings provide evidence that both IAS 39 and IFRS 9 are value rele-vant and that the second one adds more information than that previously supplied by the first one. The paper contributes to the literature by providing the first evi-dence of the usefulness of the new accounting standard on financial instruments. About its practical implications, the paper provides insights regarding the high quality of the International Accounting Standard Board (IASB)'s standard setting process.","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2020-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88868744","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":"Reviewer 2019","authors":"A. C. D. Redazione","doi":"10.1515/mks-2020-2041","DOIUrl":"https://doi.org/10.1515/mks-2020-2041","url":null,"abstract":"","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2020-05-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77355338","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":"Covers and Front Matter","authors":"","doi":"10.2308/2380-2146-5.1.i","DOIUrl":"https://doi.org/10.2308/2380-2146-5.1.i","url":null,"abstract":"","PeriodicalId":42044,"journal":{"name":"Journal of Financial Reporting","volume":null,"pages":null},"PeriodicalIF":1.5,"publicationDate":"2020-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141225652","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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