Pub Date : 2022-07-29DOI: 10.1080/00014788.2022.2079780
J. Bebbington, Andrew N. Rubin
Stewardship is a concept that has historically underpinned the practice of accounting, with a focus on the stewardship of financial resources. As times change, so too do the elements of organisational performance that might be subject to stewardship demands. Critically for this paper, a roadmap for organisational stewardship in the Anthropocene is developed. In brief, the Anthropocene is a term used to describe how human actions drive earth systems functioning, generating effects (for example) on the climate system as well as on the diversity of living creatures. Given these effects, an enlarged understanding of stewardship emerges that focuses on corporate purpose that takes account of wider than financial ambitions and effects as well as on governance processes that can support a broader perspective. The paper also highlights that achieving stewardship for ‘wicked problems’ that emerge from complex adaptive systems (with emergent elements and tipping points) might be best addressed by coalitions of organisations collaborating to achieve systems effects. Such an approach also suggests that accounting data gathering and tracing of organisational impact will require greater spatial capabilities than have previously been the case. Accounting for stewardship in the Anthropocene, therefore, represents a significant advance to current accounting practice.
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Pub Date : 2022-07-29DOI: 10.1080/00014788.2022.2079757
Mary E. Barth
Embracing the perspective of accounting as providing information to support capital allocation decisions could help avoid accounting issues ending up in the ‘Too Difficult' Box. Investors need and use information not contained in traditional financial statements. Thus, focusing on financial statements as the sole accounting output limits the ability of accounting reports to meet investors' information needs. Two issues on the horizon—accounting for digital assets and the effects of climate change—reveal how embracing this perspective could help avoid the ‘Too Difficult' Box. These issues reveal pitfalls arising from trying to fit newly created assets into categories—and consequent accounting—designed for previously identified assets. The issues also reveal potential benefits of substituting non-financial information for unavailable financial information rather than omitting the items from accounting reports. Both issues reinforce investors' need for information about risk. Digital assets, climate change, risk, and—more broadly—whether and how accounting reports should be broadened beyond financial statements motivate many interesting research questions. Insights from this research are vital as accounting faces potentially revolutionary changes in investors’ information needs.
{"title":"Accounting standards: the ‘too difficult’ box – the next big accounting issue?","authors":"Mary E. Barth","doi":"10.1080/00014788.2022.2079757","DOIUrl":"https://doi.org/10.1080/00014788.2022.2079757","url":null,"abstract":"Embracing the perspective of accounting as providing information to support capital allocation decisions could help avoid accounting issues ending up in the ‘Too Difficult' Box. Investors need and use information not contained in traditional financial statements. Thus, focusing on financial statements as the sole accounting output limits the ability of accounting reports to meet investors' information needs. Two issues on the horizon—accounting for digital assets and the effects of climate change—reveal how embracing this perspective could help avoid the ‘Too Difficult' Box. These issues reveal pitfalls arising from trying to fit newly created assets into categories—and consequent accounting—designed for previously identified assets. The issues also reveal potential benefits of substituting non-financial information for unavailable financial information rather than omitting the items from accounting reports. Both issues reinforce investors' need for information about risk. Digital assets, climate change, risk, and—more broadly—whether and how accounting reports should be broadened beyond financial statements motivate many interesting research questions. Insights from this research are vital as accounting faces potentially revolutionary changes in investors’ information needs.","PeriodicalId":7054,"journal":{"name":"Accounting and Business Research","volume":"52 1","pages":"565 - 577"},"PeriodicalIF":1.7,"publicationDate":"2022-07-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41739946","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-07-29DOI: 10.1080/00014788.2022.2079767
Veronica Poole
Barth (2022) addresses two topics that I think many of us would identify as the hot issues of the day. Technology is transforming our world, and there is plenty of research that shows that 90% of the value of the companies today is in the intangibles. The top ten business risks according to the World Economic Forum ’ s risks report are Environmental, Social and Governance (ESG) related, and that of course includes climate change. Information on these aspects is critical for understanding risks and the drivers of enterprise values today and it is therefore directly relevant to investment decisions. To me, the practitioner, accounting is not just about recognition and measurement in the fi nancial statements. It is about communication of decision-useful information. The key word is ‘ communication ’ , which enables investor decisions to be made in an informed, consistent, comparable way. This is not, therefore, a discrete dataset that we need. It is a continuum of information, from the state-ment of the purpose of the company, what it is actually setting out to do, its strategy, its governance, the targets that it sets for itself, the Key Performance Indicators (KPIs) it uses to measure progress against those targets, and ultimately the results for the reporting period, which would only make sense if they are set in that broader context. Some of this information is captured in monetary values of course, such as the numbers in fi nancial statements, some through performance and non- fi nancial metrics, and some through the narrative disclosures that provide context for the numbers or explain the numbers and how they have been derived.
{"title":"‘Accounting standards: the “too difficult” box - the next big accounting issue?’ A practitioner view","authors":"Veronica Poole","doi":"10.1080/00014788.2022.2079767","DOIUrl":"https://doi.org/10.1080/00014788.2022.2079767","url":null,"abstract":"Barth (2022) addresses two topics that I think many of us would identify as the hot issues of the day. Technology is transforming our world, and there is plenty of research that shows that 90% of the value of the companies today is in the intangibles. The top ten business risks according to the World Economic Forum ’ s risks report are Environmental, Social and Governance (ESG) related, and that of course includes climate change. Information on these aspects is critical for understanding risks and the drivers of enterprise values today and it is therefore directly relevant to investment decisions. To me, the practitioner, accounting is not just about recognition and measurement in the fi nancial statements. It is about communication of decision-useful information. The key word is ‘ communication ’ , which enables investor decisions to be made in an informed, consistent, comparable way. This is not, therefore, a discrete dataset that we need. It is a continuum of information, from the state-ment of the purpose of the company, what it is actually setting out to do, its strategy, its governance, the targets that it sets for itself, the Key Performance Indicators (KPIs) it uses to measure progress against those targets, and ultimately the results for the reporting period, which would only make sense if they are set in that broader context. Some of this information is captured in monetary values of course, such as the numbers in fi nancial statements, some through performance and non- fi nancial metrics, and some through the narrative disclosures that provide context for the numbers or explain the numbers and how they have been derived.","PeriodicalId":7054,"journal":{"name":"Accounting and Business Research","volume":"52 1","pages":"578 - 581"},"PeriodicalIF":1.7,"publicationDate":"2022-07-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43565194","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-07-29DOI: 10.1080/00014788.2022.2079699
H. Hoogervorst
It is a pleasure to have the opportunity to react to Katherine Schipper ’ s thoughtful paper (Schip-per 2022). The IASB has always worked closely with academia and Katherine ’ s thought leader-ship has always been much appreciated. Katherine Schipper ’ s paper touches upon some of the most intractable accounting issues that have proven to be unsolvable over the years. She men-tions the distinction between liabilities and equity, performance reporting and other comprehen-sive income. These were indeed very tough issues which took up much of our Board time during my chairmanship without us being able to come up with a 100% perfect solution. Katherine gives two main reasons for such accounting issues remaining elusive. The fi rst underlying cause is the lack of clear conceptual solutions. Even when a conceptually grounded solution exists, a solution may not be feasible practically, for example when it requires so many subjective judgments and estimates that the resulting information is unlikely to be comparable. It can also be the case that the solution leads to fi nancial performance reporting outcomes that are viewed as inherently undesirable. In this respect Katherine refers speci fi cally to the widespread hostility to volatility in the income statement.
{"title":"‘Why do accounting issues end up in the “too difficult” box?’ A practitioner view","authors":"H. Hoogervorst","doi":"10.1080/00014788.2022.2079699","DOIUrl":"https://doi.org/10.1080/00014788.2022.2079699","url":null,"abstract":"It is a pleasure to have the opportunity to react to Katherine Schipper ’ s thoughtful paper (Schip-per 2022). The IASB has always worked closely with academia and Katherine ’ s thought leader-ship has always been much appreciated. Katherine Schipper ’ s paper touches upon some of the most intractable accounting issues that have proven to be unsolvable over the years. She men-tions the distinction between liabilities and equity, performance reporting and other comprehen-sive income. These were indeed very tough issues which took up much of our Board time during my chairmanship without us being able to come up with a 100% perfect solution. Katherine gives two main reasons for such accounting issues remaining elusive. The fi rst underlying cause is the lack of clear conceptual solutions. Even when a conceptually grounded solution exists, a solution may not be feasible practically, for example when it requires so many subjective judgments and estimates that the resulting information is unlikely to be comparable. It can also be the case that the solution leads to fi nancial performance reporting outcomes that are viewed as inherently undesirable. In this respect Katherine refers speci fi cally to the widespread hostility to volatility in the income statement.","PeriodicalId":7054,"journal":{"name":"Accounting and Business Research","volume":"52 1","pages":"507 - 509"},"PeriodicalIF":1.7,"publicationDate":"2022-07-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47309151","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-07-29DOI: 10.1080/00014788.2022.2079811
Richard Spencer
When I read Bebbington and Rubin (2022), it very refreshingly said we are at the start of a journey and that you do not pretend to have the answers. You say the paper provides a framing with multiple questions. This feels like a bit of an understatement because the shift in world views that is embedded here is quite mind-boggling. A core idea in the paper is that the Anthropocene is like no other period in the history of our planet. This is because we are the architects of what is happening, and we know it. First, we can conceptualise and understand our world as an interconnected web of impacts and dependencies. Secondly, we are conscious of what we are doing to the planet and if we don’t act now, we will become extinct and take a lot of life on Earth with us. The other thing that struck me was just how tiny this period of time called the Anthropocene is, when compared with how high the stakes are. The narrative of the Anthropocene is often distinctly negative, with overtones of ‘We’re all doomed’ and one thing I took from your lecture was a real positive: we have an opportunity and we have the capacity to get it right. My initial reaction to the paper and to the P.D. Leake lecture on which it is based was that the optimist in me says I believe we will get there, while the pessimist says that we are in for an incredibly bumpy ride and we probably will not act until things get worse – or maybe a lot worse. Many questions came to mind, but I have distilled them into three themes. One is that conceptualising the world in systems turns upside-down our neat, categorised, mechanistic sense of the world that separates things into distinct and unconnected buckets. It shifts our understanding from being complicated to complex. Second, it turns our sense of corporate governance inside out. Third, it makes accounting incredibly difficult because it is no longer about accounting for the entity, but about making sense of how that entity relates to the world and to society. That has huge implications for the accountant. To take the first point: has our understanding of the world just been turned upside-down? I said complicated and complex. If something is complicated, you can take it apart, repair the
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Pub Date : 2022-07-29DOI: 10.1080/00014788.2022.2080350
Sudipta Basu, Martin Grace
IFRS 17 requires a significant change to insurer accounting, and we look at some of the frictions resulting from its implementation. We make three points. First, since IFRS 17 is a principles-based standard, it will be costly to implement. Audit committees must become sophisticated users of the underlying models generating the reports. Second, we examine the effect of the Sarbanes-Oxley Act on U.S. public insurers and a similar law for private insurers to assess the costs of complying with new rules. We find evidence that these costs vary in their incidence across the industry. Third, we conduct an event study of specific announcements regarding IFRS 17 promulgation and implementation. We find a negative sentiment for announcements concerning the implementation. However, we cannot identify a single specific rationale for the negative sentiment as it could be related to several factors. In sum, we find that there are many reasons to keep insurance accounting as part of IFRS and some reasons that may lead to delays in implementation, but any concern this accounting standard is ‘too difficult’ is likely not due to the standard itself but to other things that may reflect the ultimate net benefits of the standard to investors.
{"title":"Insurance: in or out of the ‘too difficult’ box?","authors":"Sudipta Basu, Martin Grace","doi":"10.1080/00014788.2022.2080350","DOIUrl":"https://doi.org/10.1080/00014788.2022.2080350","url":null,"abstract":"IFRS 17 requires a significant change to insurer accounting, and we look at some of the frictions resulting from its implementation. We make three points. First, since IFRS 17 is a principles-based standard, it will be costly to implement. Audit committees must become sophisticated users of the underlying models generating the reports. Second, we examine the effect of the Sarbanes-Oxley Act on U.S. public insurers and a similar law for private insurers to assess the costs of complying with new rules. We find evidence that these costs vary in their incidence across the industry. Third, we conduct an event study of specific announcements regarding IFRS 17 promulgation and implementation. We find a negative sentiment for announcements concerning the implementation. However, we cannot identify a single specific rationale for the negative sentiment as it could be related to several factors. In sum, we find that there are many reasons to keep insurance accounting as part of IFRS and some reasons that may lead to delays in implementation, but any concern this accounting standard is ‘too difficult’ is likely not due to the standard itself but to other things that may reflect the ultimate net benefits of the standard to investors.","PeriodicalId":7054,"journal":{"name":"Accounting and Business Research","volume":"52 1","pages":"510 - 535"},"PeriodicalIF":1.7,"publicationDate":"2022-07-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47645436","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-07-29DOI: 10.1080/00014788.2022.2079721
Jo Clube
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Pub Date : 2022-07-29DOI: 10.1080/00014788.2022.2079686
K. Schipper
I discuss outcome-based characteristics of several vexatious and recurring standard-setting issues, described for purposes of this paper as ‘too difficult,’ and apply these characteristics to identify four examples of ‘too difficult’ accounting issues: reporting financial performance; disaggregated financial performance reporting as exemplified by segment reporting; distinguishing liabilities from equity; and accounting for intangible assets. I use existing and superseded IFRS and US GAAP standards and due process documents to illustrate the ‘too difficult’ nature of these issues. I then analyse the four ‘too difficult’ issues and discern two underlying causes. The first cause arises because existing conceptual frameworks contain either no guidance or indeterminate guidance for resolving ‘too difficult’ issues. The second cause arises when a conceptually grounded solution to a reporting issue exists but one of the following conditions is present: the solution is, as a practical matter, infeasible to implement; the solution requires so many subjective judgments and estimates that the resulting information is unlikely to be comparable and timely; the solution raises concerns about what some view as undesirable outcomes in performance reporting, in particular, volatility. I briefly discuss the extent to which extant accounting research might assist in resolving ‘too difficult’ issues and offer suggestions for future research.
{"title":"Why do accounting issues end up in the ‘too difficult’ box?","authors":"K. Schipper","doi":"10.1080/00014788.2022.2079686","DOIUrl":"https://doi.org/10.1080/00014788.2022.2079686","url":null,"abstract":"I discuss outcome-based characteristics of several vexatious and recurring standard-setting issues, described for purposes of this paper as ‘too difficult,’ and apply these characteristics to identify four examples of ‘too difficult’ accounting issues: reporting financial performance; disaggregated financial performance reporting as exemplified by segment reporting; distinguishing liabilities from equity; and accounting for intangible assets. I use existing and superseded IFRS and US GAAP standards and due process documents to illustrate the ‘too difficult’ nature of these issues. I then analyse the four ‘too difficult’ issues and discern two underlying causes. The first cause arises because existing conceptual frameworks contain either no guidance or indeterminate guidance for resolving ‘too difficult’ issues. The second cause arises when a conceptually grounded solution to a reporting issue exists but one of the following conditions is present: the solution is, as a practical matter, infeasible to implement; the solution requires so many subjective judgments and estimates that the resulting information is unlikely to be comparable and timely; the solution raises concerns about what some view as undesirable outcomes in performance reporting, in particular, volatility. I briefly discuss the extent to which extant accounting research might assist in resolving ‘too difficult’ issues and offer suggestions for future research.","PeriodicalId":7054,"journal":{"name":"Accounting and Business Research","volume":"52 1","pages":"482 - 506"},"PeriodicalIF":1.7,"publicationDate":"2022-07-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47061672","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-07-27DOI: 10.1080/00014788.2022.2062585
Christian Brück, Thorsten Knauer, A. Schwering
We examine the determinants of the disclosure of value-based (VB) performance measures in Germany. We argue that firms are more likely to disclose VB performance measures when information asymmetry is greater, as greater information asymmetry means firms have a greater need to credibly signal a shareholder value orientation. Using a hand-collected dataset of German listed firms covering 1,528 firm-years from 2004 to 2011, we demonstrate that firms are more likely to disclose a VB performance measure if the free float is larger than the blocking minority and also, when firms are large, if they have high foreign sales to total sales ratios and are not cross-listed internationally. Our results indicate that German firms use VB performance measures to improve investor communication and to substantiate their shareholder value orientation. Our results should be interpreted against a background of increased shareholder value orientation and sophisticated cost accounting in German firms.
{"title":"Disclosure of value-based performance measures: evidence from German listed firms","authors":"Christian Brück, Thorsten Knauer, A. Schwering","doi":"10.1080/00014788.2022.2062585","DOIUrl":"https://doi.org/10.1080/00014788.2022.2062585","url":null,"abstract":"We examine the determinants of the disclosure of value-based (VB) performance measures in Germany. We argue that firms are more likely to disclose VB performance measures when information asymmetry is greater, as greater information asymmetry means firms have a greater need to credibly signal a shareholder value orientation. Using a hand-collected dataset of German listed firms covering 1,528 firm-years from 2004 to 2011, we demonstrate that firms are more likely to disclose a VB performance measure if the free float is larger than the blocking minority and also, when firms are large, if they have high foreign sales to total sales ratios and are not cross-listed internationally. Our results indicate that German firms use VB performance measures to improve investor communication and to substantiate their shareholder value orientation. Our results should be interpreted against a background of increased shareholder value orientation and sophisticated cost accounting in German firms.","PeriodicalId":7054,"journal":{"name":"Accounting and Business Research","volume":"53 1","pages":"671 - 698"},"PeriodicalIF":1.7,"publicationDate":"2022-07-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41901046","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-07-01DOI: 10.1080/00014788.2022.2071199
Katrin Hummel, Stéphanie Mittelbach-Hörmanseder, Charles H. Cho, Dirk Matten
In this study, we investigate the potential differences in topic-specific corporate social responsibility (CSR) disclosure between companies located in liberal market economies (LMEs) and coordinated market economies (CMEs). We also examine the potential convergence of the reporting practices that characterise these two economies over time. We analyse a sample of 5,939 CSR reports issued by European and U.S. firms over 2008–2019. We use textual analysis to examine how explicitly such reports address specific CSR topics. Following Matten and Moon (2008), we focus on three thematic areas: ‘human resources’, ‘environmental protection’, and ‘society at large’. Each area comprises three distinct topics. Our results show that companies operating in LMEs report more explicitly on these thematic areas, with one exception: those operating in CMEs report more explicitly on parental policies. Additionally, the reporting practices of companies operating in these two types of economies converge for most of the topics under study. For the disclosure of parental leave policies, biodiversity, and waste, no distinct trend is observable.
{"title":"Corporate social responsibility disclosure: a topic-based approach","authors":"Katrin Hummel, Stéphanie Mittelbach-Hörmanseder, Charles H. Cho, Dirk Matten","doi":"10.1080/00014788.2022.2071199","DOIUrl":"https://doi.org/10.1080/00014788.2022.2071199","url":null,"abstract":"<p>In this study, we investigate the potential differences in topic-specific corporate social responsibility (CSR) disclosure between companies located in liberal market economies (LMEs) and coordinated market economies (CMEs). We also examine the potential convergence of the reporting practices that characterise these two economies over time. We analyse a sample of 5,939 CSR reports issued by European and U.S. firms over 2008–2019. We use textual analysis to examine how explicitly such reports address specific CSR topics. Following Matten and Moon (2008), we focus on three thematic areas: ‘human resources’, ‘environmental protection’, and ‘society at large’. Each area comprises three distinct topics. Our results show that companies operating in LMEs report more explicitly on these thematic areas, with one exception: those operating in CMEs report more explicitly on parental policies. Additionally, the reporting practices of companies operating in these two types of economies converge for most of the topics under study. For the disclosure of parental leave policies, biodiversity, and waste, no distinct trend is observable.</p>","PeriodicalId":7054,"journal":{"name":"Accounting and Business Research","volume":"91 1","pages":""},"PeriodicalIF":1.7,"publicationDate":"2022-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138533705","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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