Fr

Current issues on European Corporate Governance

[Opinion]

I have been invited to provide my view on current issues on European Corporate Governance (CG). I am happy to follow the approach of David Alexander providing his opinion on the question “Is there such a thing as European Financial Reporting?” published in this Journal in the 4th issue of 2012: He proposes to concentrate on the “opinion” rather the “expert” part and does not provide an extensive bibliography. He concludes that financial reporting in Europe – which is not European financial reporting – is in a mess and highlights the (not always convincing) role of us academics in this standard-setting game. At least for the European Union (not Europe, as e.g. Switzerland or Norway should not be ignored) my conclusion seems to be obvious: of course there is nothing like a “European Corporate Governance”. We now have 28 Member States with 28 national company and commercial laws, national and international sets of disclosure rules, codes etc. However, in the last decade we have witnessed the European Commission as a very active standard setter. 2000 words for this article are by far not enough even to briefly describe this. Accordinly, I will concentrate on two recent attempts to change, improve and harmonize corporate governance: The Green Paper “The European corporate governance framework” from April 2011 and the Commission’s “Action Plan: European company law and corporate governance – a modern legal framework for more engaged shareholders and sustainable companies” from December 2012. In the rest of this article, I will use the terms Green Paper and Action Plan. […]

Fr

SME Accounting Evolution in Europe: The role of EFRAG

[Dialogue with standard setters]

In recent years, the institutions of the European Union (EU), recognising that small and medium-sized enterprises (or entities; SMEs) play a key role in the EU economic system, have sharpened their political focus on such enterprises and introduced further legislation to support them. In the field of accounting and financial reporting, the European Commission has, since 2009, intensified its efforts to review the accounting directives (78/660/EEC and 83/349/EEC), with the stated fundamental objective of relieving small enterprises and unlisted companies of excessive administrative burdens. The enactment of directive no. 6/2012 (introducing the new size-based category of “micro-entity”) in March 2012 and of the new unified accounting directive no. 34/2013 in June 2013 have been the most recent steps in the review process. “SME accounting” – a shorthand expression for the accounting standardisation that targets unlisted SMEs – has become increasingly relevant recently, in response to rising demand for global standards, especially among developing and emerging economies. SME accounting has thus become a crucial strategic issue for global standard setters. Whereas accounting global standardisation for listed and large companies may seem to be clear and foreseeable (at least in the short– medium term), SME accounting is experiencing an unprecedented evolutionary phase, whose final outcomes are unpredictable. […]

Fr

Research Forum on “Intangibles”

[Editorial]

In recent years one of the most frequently used “buzzwords” is that we live in a knowledge economy. This concept is articulated in a multifaceted number of expressions (e.g. information economy, knowledge-based society, intangible economy, conceptual companies, and so on), which stress differentiated and yet connected aspects. By the same token, a number of studies (e.g. Corrado and Hulten, 2010) has revealed that we are facing a new phase in the evolution of the capitalistic system, where investments on intangibles have overcome those on tangibles. It is evident that the two phenomena are intertwined: the new role and weight of knowledge in the economic system and organisations is likely to be a primary trigger of the role and weight of intangibles therein. Indeed, intangible resources are genetically linked to knowledge. This epochal change in the investment pattern and economic role of knowledge is determining – amid various consequences – a paradigm shift also in the management of organisations and their value drivers. Reputation, research, know-how, brands, skills, procedures, intellectual property, technological capabilities, leadership, customer relationship are all depending on different forms of knowledge, and in the last twenty years they have also become strategic elements for corporate growth. Not surprisingly, companies, national and international institutions, research centers, academic journals have devoted increasing attention to intangibles and their effects on economic systems and agents. […]

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FR2013.3_2_ZAMBON

Fr

Balancing on a Tightrope: Customer Relational Capital, Value Creation and Disclosure

This paper documents and compares the perceptions of key functional specialists regarding the contribution of 16 customer relational capital components to value creation and the motivations underlying its external disclosure. Findings of questionnaire surveys to samples of UK listed company marketing directors (who create customer relational capital) and finance directors (who report customer relational capital) are supplemented by follow-up interviews. Marketing directors and finance directors broadly agreed on the relevant importance of the components to value creation. While companies attempted to internally collate information on those components of most value creation importance, there was a lack of correlation between perceived value creation importance and the extent of external disclosure. This suggests that external disclosure is a poor proxy for value creation importance. In terms of disclosure incentives, marketing directors prioritise trust creation among a range of stakeholders whereas finance directors take a more share holder-centric perspective. External disclosure attracts new customers and informs other stakeholders, yet may adversely affect relationships with existing customers and/or breach specific non-disclosure agreements or generic industry restrictions and regulations. Harming competitive position is considered the major disclosure disincentive. In the view of marketing directors, managing the external disclosure of relational capital is akin to balancing on a tightrope.

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Keywords: Customer relational capital, intellectual capital, value creation, marketing directors, disclosure.

Fr

The Story of the French Touch on “Immatériels”: A Retrospective

The present paper aims to trace the recent tendencies, in France, around the concept of “actifs immatériels”, including both intangible assets and intellectual capital. In its first part we develop semantic and contextual specificities which might explain the late engagement on such topics by French scholars. The second part is about observed trends and initiatives, some in which the authors were involved. The section has two parts, one on academic and institutional initiatives and the other on corporations and individuals who have entered the field, especially after 2006. The third part comes to critical perspectives on intangibles, leading to a discussion where the broad concept of actifs immatériels provides a framework for understanding economics not only on the company level, but also on the state level. The resulting “dialectic immaterialism” thus provides a relevant rereading of new capitalism.

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Keywords: Intangible, assets, capital, immatériels.

Fr

Regulating through the “Logic of Appropriateness” and the “Rhetoric of the Expert”: The Role of Consultants in the Case of Intangibles Reporting in Germany

The paper provides some insights into the rationales, processes and actors according to which Intangibles Reporting (IR) has reached a (soft) regulatory stage in the German business context since the mid 2000’s. It draws on the “logic of appropriateness” (March and Olsen, 1992; 1997) combined with the “rhetoric of the expert” (Czarniawska, 1997) in order to examine the documents published in relation to IR. The analysis demonstrates how in Germany this (soft) regulation of reporting of these resources has been mainly realized by a group of management consultants. It is of a particular interest that in the Guidelines they have devised and promoted, the ad hoc organizational figure, the moderator, that has been identified as central for the proposed intangibles reporting does not belong to the accounting domain. This way, the work contributes and expands on previous debates in relation to the “professional jurisdiction” that has made claim throughout the arena of Intangibles by accountants (Napier and Power, 1992; Power, 2006), illustrating an example of an alternative site in which its professionalization and regulation can occur (Cooper and Robson, 2006). Specifically, it is suggested that the actors and the ways in which regulation is created and perpetuated have sometimes to be disentangled from the ones created within the accounting field.

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Keywords: Regulation, experts-Consultants, Germany, appropriateness, intangibles

Fr

Some Unintended Consequences of Metaphors: The Case of Capital in Intellectual Capital Research

The paper focuses on the consequences that the metaphorical use of the concept of capital can generate on research on Intellectual Capital. Consequences here analysed refer to: 1) the understanding of IC as being composed of homogenous and separable units; 2) those that are assets; 3) those expected to be under the proprietorship of someone; and 4) those expressible in monetary terms on the balance sheet. The analysis of consequences also offers some insights into overcoming the capital metaphor in favour of a sharper differentiation between the concepts at the basis of the traditional notion of capital, and the ones at the basis of IC.

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Keywords: Metaphor, theory of firm, resource-based, view.

Fr

Special Forum on “Social and Environmental Accounting and Accountability”

[Editorial]

The purpose of this editorial is twofold. First, to present the reasons as to why we asked Financial Reporting to host a Special Forum on Social and Environmental Accounting and Accountability (SEAA) research. Second, to summarize the contributions that are published therein and provide Financial Reporting readers with insights on the hot topic of SEAA research today. The idea of this Special Forum was conceived during a period in which Italian Academia was (and still is) undergoing many changes, including both an active involvement but also, and unfortunately, passive reforms – especially when these changes are brought into the system with a pronounced top-down approach. Undoubtedly, internationalization in Italy has become one of the major challenges and a sensitive topic in academic debates, particularly after the new national procedures on the accreditation to become Associate or Full Professor were put in place. Too often, internationalization is interpreted as the necessity to merely publish in international journals but we believe this outcome is “only” the result of a much more complex process. Infact, internationalization requires being open to new and different methodological approaches, being ready to identify relevant research questions with wide implications and, above all, the ability to work and study in an international environment and collaborate within an international network. […]

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FR2013.2_1_CHO

Fr

Lessons from the Third Wave: A reflection on the rediscovery of Corporate Social Responsibility by the mainstream accounting research community

In this paper, I reflect on what I, as a long-time member of the social and environmentalaccounting community, see as both the positive and negative aspects ofwhat I refer to as the ‘third wave’ of corporate social responsibility (CSR) researchby more mainstream accounting researchers. I note that CSR-themed articles havebeen published in the primary mainstream journals, in waves (and a ripple), sincethe 1960s, and I review those contributions. More importantly, I attempt to assesswhat the newest wave of research adds to the body of knowledge, and how thatmight have implications for the social and environmental accounting community.

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Keywords: Social and environmental accounting, corporate social responsibilityreporting, mainstream accounting

Fr

Socio-environmental reporting trends in the Italian local government: Thrive or wither?

Social and environmental reporting (SER) in the public sector has been widelydiscussed in the last years (Gray et al., 1996; Mathews, 1997; Parker 2005; Guthrieand Abeysekera, 2006; Guarini, 2002; Hinna 2004; Marcuccio and Steccolini,2005). However, despite the interest in this area of research, there are still a numberof calls to deepen the study of SER in the public sector (Lewis, 2008; Grubnikand Ball, 2007). In Italy, the literature shows the risk of adopting SER as a managementfashion, more than a conscious process of organizational change (Marcuccioand Steccolini, 2005). This paper investigates about the reasons for theadoption and eventual abandonment of SER by local government in Italy.

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Keywords: Social reporting, environmental reporting, local government, adoptionand abandon of SER

Fr

Research needs and opportunities in Context-Based Sustainability

In recent years, a new, literalist approach to managing the sustainability performanceof organizations has emerged, the makeup of which stands in stark contrastto the prevailing, incrementalist approach. Unlike the incrementalist approach,which is predicated on the view that progress in sustainability occurs whenevermarginal improvements in the social and environmental impacts of organizationsare made, the literalist approach takes a more rigorous stand. Under the literalistdoctrine (also known as context-based sustainability, or CBS), an organization’ssustainability performance is a function of what its social and environmental impactsare relative to specific norms, standards, or thresholds for what such impactsmust be in order to be sustainable. Here the literalist doctrine relies on the principleof sustainability context, or the general idea that sustainability performance assessmentsmust be made in light of social and ecological limits, and never withoutthem. Actual implementations of sustainability context in practice, however, arestill the exception, not the rule, mainly because generally-accepted guidelines forhow to do it do not yet exist. In response, this paper takes up the question of whatthe research and development needs and opportunities are in the field of CBS, andwhich must be addressed if moving sustainability context from the realm of theoryinto practice is to have any chance of succeeding. The authors begin by definingCBS, explaining the logic and epistemology behind it, and then continue by identifying and discussing specific issues of interest for further research and developmentin the social and environmental accounting domains.

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Keywords: Epistemology, incrementalist, literalist, sustainability context.

Fr

Has accounting quality increased in Europe after IFRS adoption?

 [Opinion]

Since 2005, European listed companies must comply with IFRS in the preparation of their consolidated financial statements. The objective of this note is to provide a short synthesis of the effects of IFRS adoption on the quality of financial reporting in Europe. A comprehensive review of available empirical evidence has recently been published (Brüggemann et al., 2013). I will thus only mention a limited number of studies and outline some lessons that can be drawn from their results. […]

Fr

The EFRAG activities on taxation: A survey of the recent work

[Dialogue with standard setters]

 

The object of this brief note is to analyze the interest of EFRAG in fiscal matters on the basis of its activities through an examination of the different papers it has produced over the years. In its activity, both as advisor to the standard setting and enforcement and as proactive stimulator of debate on relevant issues, the EFRAG has demonstrated a certain interest towards the question of tax. A piece of research carried out has led to a list (starting from the most recent and ending with the oldest) of 10 discussion papers addressing the subject at hand, of which we give here only the titles: 1. 08/02/2013: EFRAG and FRC issues, the feedback Statement on the Discussion Paper “improving the Financial Reporting of income tax”; 2. 04/09/2012: EFRAG reports on consolidated input received in European outreach events on the discussion paper on improving the Accounting of Income taxes; 3. 14/06/2012: EFRAG reports on input received at the European outreach event held on 15th March in Milan on the discussion papers ‘Business Combination under Common Control’ and ‘Improving Financial Reporting of Income tax’; 4. 01/06/2012: EFRAG reports on input received at the European outreach event held on 18th April in Vienna on the discussion papers ‘Business Combination under Common Control’ and ‘Improving Financial Reporting of Income tax’; 5. 30/05/2012: EFRAG reports on input received at the European outreach event held on 15th  May in Warsaw on the discussion papers  ‘Business Combination under Common Control’ and ‘Improving Financial Reporting of Income tax’; 6. 29/05/2012: EFRAG reports on input received at the European outreach event held on 17th April in Amsterdam on the discussion paper ‘Improving Financial Reporting of Income tax’; 7. 10/05/2012: EFRAG reports on input received at the European outreach event held on 16th April in London on the discussion papers  ‘Business Combination under Common Control’ and ‘Improving Financial Reporting of Income tax’; 8. 10/09/2009: EFRAG’s Comment Letter on IASB ED Income tax; 9. 28/07/2009: EFRAG extends its comment deadline on the IASB ED Income taxes; 10. 05/06/2009: EFRAG extends its comment deadline on the IASB ED Income taxes. This list of Discussion Papers is essentially the result of two major projects in our area of interest, as it may be inferred from reading the last Annual Review (2011): Business Combinations under Common Control and Improving the Financial Reporting of Income Tax. […]

Fr

Current development of Disclosure Framework within the EFRAG Proactive Work

Over the past decade, the modification of the economic environment (complexity of the capital markets, the development of the new classes of assets and the significant widespread use of fair value accounting) have created the conditions to include more detailed disclosures in the corporate reporting in order to facilitate the investors’ decision-making processes. As a result, the note disclosures in financial statements have increased considerably producing a tension between the importance of a “relevant and faithful representation” of corporate reporting and the complexity, subjectivity and less reliable nature of the disclosure. The essential role of the notes to the financial statements has led many standard setters to develop a framework for disclosures. Among others, the European Financial Reporting Advisory Group, within the broader context of its Proactive Work, the Authorité des Normes Comptables (ANC), and the Financial Reporting Council (FRC) published a Discussion Paper on 12 July 2012 entitled “Towards a Disclosure Framework for the Notes”, which aims to address the underlying principles and content of corporate disclosure to assist standard setters in developing disclosure requirements on a more consistent basis using a set of agreed principles. […]

Fr

Increasing the relevance of “Policy Relevant Research”

[Opinion]

The relevance of accounting academic research for the standard setting process has been the subject of debate for decades. Already in the 1990s both standard-setters (Beresford, 1994; Leisenring and Johnson, 1994; Beresford and Johnson, 1995) and academics (Schipper, 1994; Swieringa, 1998) suggested that there should be a greater role for academic research in the standard setting process and lamented the fact that in practice this seems difficult to achieve. Prominent accounting researchers who had been involved in the standards setting process have for some time encouraged stronger links to be forged between academics and standard setters (see Schipper, 1994). Two decades later the issue remains unresolved. Some argue that academic research has contributed to understanding the role of accounting information in decision-making and its impact in capital markets but it has had scant influence on the standards themselves (Gebhardt, 2008, Granof and Zeff, 2008). This has led some commentators to be quite sceptical about the usefulness of accounting research for policy making and to argue that very little of this research can be directly translated into information that can support the policy choices. […]

Fr

Assessing value relevance of comprehensive income in European banks and other financial institutions

The IAS/IFRS compliant groups have been disclosing comprehensive income since 2009, when the IAS 1-revised became effective. This paper aims to investigate the value relevance of comprehensive income and its components in European banks and other financial institutions. The research has been developed by having a sample of 166 European listed groups whose data have been collected in the 2009, 2010 and 2011 (498 firm-year observations) consolidated financial statements. In contrast to previous findings, related to all the sectors, our research highlights a higher value relevance of comprehensive income in respect to net income. Moving to the single OCI components, our results suggest that gains and losses on remeasuring available-for-sale financial assets (AFSit) are value relevant in European banks and other financial institutions.

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Keywords: Comprehensive income, net income, value relevance, IAS 1-revised, European listed groups

Fr

Risk profile disclosure requirements for Italian insurance companies: Differences in the financial statement preparation

The content of the annual report of insurance undertakings is regulated by art. 2428 of Italian Civil Code, as well as by the Insurance Code and specific Italian Insurance Supervisor’s regulations. The paper compare the existing legislations, providing an overview of the different requirements, with particular attention to the risk profile disclosure. Moreover, the paper analyzes a significant sample of Italian insurance groups annual reports (from 2007 to 2009 financial year), using content analysis, in order to highlight the level of compliance with the existing rules and the level of preparedness for the upcoming Directive 2009/138/EC requirements (Solvency II Directive), which will come into force starting from 2012 financial year.

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Keywords: Annual report, disclosure, financial statements, insurance risk profile, Solvency II, Solvency and Financial Condition Report (SFCR).

Fr

An exploratory study of intangibles risk disclosure in annual reports of banking companies from the UK, US, Germany and Italy – Some descriptive insights

Intangibles are viewed as the key drivers in most industries, and current research shows that firms voluntarily disclose information about their investments in intangibles and their potential benefits. Yet little is known of the risks relating to such resources and the disclosures firms make about such risks. In order to obtain a more balanced and complete picture of firms’ activities, information about the risky side of their intangibles is also needed. This exploratory study provides some descriptive insights into intangibles-related risk disclosure in a sample of 16 large banks from the United States (US), United Kingdom (UK), Germany and Italy. Annual report data is analyzed using the three Intellectual Capital dimensions. Study findings illustrate the variety of intangibles-related risk disclosure as demonstrated by the banks involved.

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Keywords: Intangibles, risks related to intangibles, risk reporting, disclosure, banking sector, content analysis

Fr

Investigation of risk management and risk disclosure practices of Italian listed local utilities

Local utility services deeply affect the overall quality of life of a country’s population. For this reason service providers should pay strong attention to risk management practices, but also to the external communication of both the risk exposure and the risk responses. Following a qualitative methodology, this paper aims at exploring the risk management and risk disclosure practices of five Italian listed local utility companies combining two research methods: questionnaire and document analysis. Results show that these Italian listed local utilities are characterized by different maturity levels of risk management practices, which are not extensively disclosed in public reports and documents. Interestingly, the link between the level of disclosure and maturity of risk management practices is confirmed just for those companies that seem to be the most mature in terms of risk management.

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Keywords: Risk disclosure, public utilities, risk management

Fr

EFRAG in Academic Research: a Survey

[Dialogue with standard setters]

 

The European Financial Reporting Advisory Group (EFRAG) was established in 2001 to provide input to the development of accounting standards and to provide the European Co ission with technical expertise on Accounting matters. Its main task is to advice to the European Co ission before it endorses standards. The key role in the European institutional environment has given to EFRAG a significant capability of influencing the standard setting process conducted by IASB. In a more substantial perspective, the main role of EFRAG is to participate to the development of IFRSs so that they can be endorsed for use in the European Union. A review of EFRAG’s present structure and of the documents it has issued shows that its activity has gone far beyond advising the European Co ission and the Accounting Regulation Co ittee during the endorsement process; EFRAG has also been pursuing a proactive role in its involvement with IASB and IFRIC and in the improvement of accounting directives. In doing this, it has been obtaining a growing interest among institutions, preparers and users, as confirmed by the funding of, and participation in, working groups by these stakeholders. EFRAG’s activities can be intuitively considered relevant for Accounting studies.  Il could be interesting to analyze the “real” influence of EFRAG’s output on accounting rules and practice and the perception of this influence by its stakeholders, starting from European Co ission. Moreover, evidences about the interest of Scholars in EFRAG’s activities and about the relevance given to academic research in EFRAG’s action could contribute to a better understanding of the attention EFRAG and Accounting scholars pay each other. […]

 

Fr

Just some order in financial reporting studies – the need for a taxonomy.

[Editorial]

The pressure for publishing, together with the global scope of financial reporting research, contribute to an impressive production of original studies by scholars, with no more geographical borders. Obviously this fact is positive for the progress of our discipline but if we get a keener look at the situation, we can identify many aspects where a more collaborative activity within the community of scholars could improve our work, giving more order to our field of study. In this sense, an urgent need is the development of a taxonomy of issues. A taxonomy refers to the unavoidable necessity to classify studies (articles, books, and other contributions), in order to easy search and retrieval. For a researcher a clear understanding of previous studies on the same issue is a due step of the work, but this activity is often based on heuristics, with a large potential to increase its efficiency. The actual research strategies are different. One of the most used is starting from some well-known papers, and, through the references included there, enlarging the knowledge of the extant literature. More systematic research in scientific paper data-bases is often the following step, but we need to choose the right keywords, in order not to miss relevant work. Obviously, with a detailed and generally accepted taxonomy applied on all the papers, this searching activity would be enormously empowered. In this sense, the impressive growth of scientific journals and other publications contributes to increasing the problem and the necessity for its solution. We don’t have any general accepted taxonomy in our field. […]

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FR2013.1_1_QUAGLI

Fr

Lessons learned from the financial crisis – unveiling alternative approaches within valuation and accounting theory

In the aftermath of the financial crisis, one of the most topical research questions is what caused it. We argue that one of the causes is the insufficient theoretical background employed in most valuation cases. Over the last six decades, there has been constructive debate between the proponents of the various valuation theories. However, the advocates of the Anglo-Saxon valuation theory seem unimpressed by the outcomes, claiming that there is no viable alternative to their preferred theory. Consequently they cling to unrealistic assumptions like perfect capital markets and pure competition, and thereby deepen the financial crisis by excusing overvaluation. This research presents an alternative, functional business valuation, to assist business valuation. It indicates that knowledge of the functional theory and its application might help prevent similar undesirable developments in the future. Another cause of the financial crisis, tightly connected to the cause mentioned above, lays in the (theoretical) construct of “fair value accounting” and its undesirable pro-cyclical effects. Such effects are generally considered a matter of fact, but have rarely been linked to the neo-classical Anglo-Saxon valuation theory and its major shortcomings until now. A further factor promoting the financial crisis is the assertion that there are no useful alternatives to fair value accounting and its apotheosis to the “mark-to-market approach”. A look into accounting history reveals at least one applicable alternative approach – the “historical cost principle”.

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Keywords: Financial crisis, business valuation, fair value accounting, historical cost accounting

Fr

The conceptual framework for Financial Reporting and Accounting Studies for Capital Market

[Dialogue with standard setters]

The International Accounting Standard Board (IASB) and the Financial Accounting Standard Board (FASB) in October 2004 decided to add to their agendas a joint project to develop a common conceptual framework, based on both the existing IASB Framework and the FASB Conceptual Framework. The joint project IASB – FASB related to the Conceptual Framework (CF) for Financial Reporting (FR), that include 8 Phases (Phase A: Objectives and qualitative characteristics; Phase B: Elements and recognition; Phase C: Measurement; Phase D: Reporting entity; Phase E: Presentation and disclosure; Phase F: Purpose and status; Phase G: Application to non-profit entities; Phase H: Remaining issues) in 2010 produced a first document on the objectives and qualitative characteristics (Phase A). Following this document, the IASB published a new version of its CF composed of 4 chapters (1 – The objective of general purpose financial reporting; 2 – The reporting entity; 3 – Qualitative characteristics of useful financial information; 4 – The Framework (1989): the remaining text):as Chapter 2 is not approved and Chapter 4 is the same of the previous version of CF, the paper briefly show the new objective (Chapter 1) and qualitative Characteristics (Chapter 3) of FR and also propose a link between the CF and the classification of Accounting Studies for the Capital Market. In September 2012, IASB and FASB recommended to focus the project on elements of financial statements, measurement, reporting entity, presentation and disclosure and to propose a single discussion paper covering all the areas, rather than separate discussion papers for each area. […]

Fr

Lots done, more to do..

[Editorial]

This issue includes some relevant changes, due to Financial Reporting strategic aim to become a real European common ground to debate accounting and financial communication topics. First of all, this issue is the first completely written in English, after the initial “Italian” phase (since 2009). This is a necessary step in order to reach a wider public, both as readers and authors. Secondly, we launched two new sections. The first is “Dialogue with standard setters”, hosting comments and proposals of particular interest for the European accounting context related to the standard setters recent activities. In this number there is a comment to the new framework of the IASB, but in the future we are interested in considering also EU official institution (Parliament, Commission) activities in the financial reporting field. We strongly believe the European financial reporting is a rich context for academic studies. The effect of IFRS mandatory adoption together with the co-existence of different accounting rules for non-listed companies, increasingly differentiated on the basis of the company size, implies a complex accounting structure, with multiple potential objects to study. The persistence of national differences regarding the actual adoption of common standards, national pressures towards the adoption/change of IFRS and/or European rules, the emerging role of non-accounting reporting (e.g., integrated business reporting and sustainability reporting), provide scholars with a unique setting to produce new ideas and to verify the basic assumptions of financial reporting. […]

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FR2012.4_1_QUAGLI

Fr

Is there such a thing as European Financial Reporting?

[Opinion]

I have been invited to write 2000 words about the ‘current existing European accounting situation’, under the general heading of ‘expert’s opinion’. I welcome the opportunity, and propose to concentrate on the ‘opinion’ part rather than the ‘expert’ part. A real academic expert exposition of the ideas would include a very long and detailed bibliography, which is not the ethos I follow here. Rather than select on an ad hoc basis, I give no bibliography at all; the web is available. I believe that financial reporting in Europe, which is not at all the same thing as the ‘European financial reporting’ of my title, is in a mess. I shall support this belief below, in a manner which hopefully will both provoke thought and discussion, and will contribute towards readers’ research agendas. But the root cause of the problems is a failure to provide rigorous theoretical and intellectual analysis of the contexts, needs and objectives of financial reporting. This is a failure by the academic community as a whole. Politicians and bureaucrats (and Eurocrats) are making not only the strategic decisions, which is indeed the prerogative of those we elect (which does not include either bureaucrats or Eurocrats), but many tactical and operational decisions as well. Intellectual dishonesty is rampant, and we as academics have an obligation, and we should have the ability, to expose it. We have largely failed in recent years. To avoid suspense, the answer I give to the title question is ‘No’. Neither the problems I shall outline at national/country level, nor the problems at IASB level, will be alleviated until the validity of this answer is recognised. […]

Fr

Oral financial reporting: A rhetorical analysis of earnings calls

Earnings calls are a key form of voluntary financial reporting through which companies seek to proactively engage investors. Although now quite routine, little is known about their rhetorical dimension. Inspired by Aristotlean classical rhetoric, this paper offers an exploratory analysis of the language of a small sample of earnings calls to identify expressions of logos (reason), ethos (credibility) and pathos (emotion). Text analysis software was used to generate descriptive data for follow-up qualitative analysis to interpret strategic usage. Results indicate a strong presence of persuasive language that is skillfully juxtaposed by company executives with financial information to emphasize success and instill confidence. The findings can be applied towards developing state-of-the-art courses for students of financial communication and towards enhancing the effectiveness of financial reporting.

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Keywords: Financial reporting, classical rhetoric, earnings calls, corpus linguistics

Fr

Impression management and legitimacy strategies: The BP case

The aim of this paper is to study if and how impression management varies during different phases of the legitimation process, in particular during the legitimacy building and legitimacy repairing phases (Suchman, 1995). We aim at understanding whether and how the disclosure tone adopted by a company in the two different moments is diverse and thus functional to the intrinsic objective of the each phase. The empirical analysis focuses on the case of British Petroleum Plc. We investigated the impression management practices undertaken by the company both during the preparation of the rebranding operation, i.e. a situation in which the company is trying to build legitimacy; and during the happenings of two legitimacy crises, like the explosion of the refinery in Texas City and the oil spill in the Gulf of Mexico. The evidence appears in line with the theoretical prediction of legitimacy theory. Results show that while the company tends to privilege image enhancement techniques during the legitimacy-building phase, it uses more obfuscation techniques when managing a legitimacy-repairing process. Moreover, the analysis suggests that the company makes more extensive use of impression management techniques in the disclosures addressed to shareholders, investors and other market operators than in the disclosures addressed to the wide range of other stakeholders.

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Keywords: Impression management, disclosure tone, legitimacy building, legitimacy crisis

Fr

La valutazione del patrimonio museale: il caso del Museo di Storia Naturale di Firenze

Il presente lavoro mira ad individuare le prassi per la valutazione dei beni culturali di proprietà delle pubbliche amministrazioni attraverso lo studio del caso del Museo di Storia Naturale di Firenze. Dopo aver esaminato le principali indicazioni della prassi e della dottrina in tema di valutazione dei beni culturali, gli autori affrontano un caso di studio nel quale è stato adottato, per l’inventariazione dell’intero patrimonio museale, uno dei metodi in precedenza discussi, ossia la stima degli esperti, quale proxy del valore di mercato delle collezioni. Con riferimento al caso di studio si indicano le motivazioni a supporto del metodo adottato e le difficoltà incontrate nella conduzione del processo valutativo. Dall’indagine condotta emergono alcuni limiti ed alcuni potenziali sviluppi della ricerca, evidenziati nelle conclusioni, sui criteri di valutazione del patrimonio museale.

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This work aims to determine the practices in the valuation of public heritage assets by analyzing the case of Natural History Museum of Florence. After examined the main recommendations in the valuation of cultural assets from practice and theory, the authors are checking the research hypothesis that monetary assessment of collections may improve the discharge of internal and external accountability duties of the museum, by screening the methods useful for this goal. Among these methods, a particular attention is dedicated to the expert appraisal as a proxy of the collections market value. The case study, that has been selected because of its criticality, confirms the research hypothesis, even if some limitations and potential developments emerge from the analysis and are discussed in the conclusions.

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Keywords: Museum heritage, public heritage assets, expert assessment, market value, Contingent Valuation Method, Natural History Museum of Florence

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Fr

Le novità sulla Revisione legale dei conti

[Audit e professioni contabili]

La pubblicazione nella Gazzetta Ufficiale del 29 agosto dei Decreti Ministeriali n. 144, 145 e 146, ha completato il ridisegno della normativa nazionale sulla revisione legale dei conti sulla base della Direttiva 2006/43/CE. Il quadro che ne risulta sembra paventare la configurazione di una sorta di ordinamento professionale autonomo, per quanto prossimo a quello dei Dottori commercialisti. L’impatto della Riforma sull’ ordinamento del nostro Paese è stato abbastanza significativo. Il d.lgs. n. 39/2010, che dava attuazione alla direttiva europea ha inciso a più livelli, sia modificando direttamente l’infrastruttura normativa civilistica, sia codificando a livello legislativo principi e comportamenti che erano già di generale accettazione nella prassi. Sul piano normativo, si è scelta un’unificazione concettuale e definitoria, con l’introduzione della “revisione legale dei conti” in sostituzione delle precedenti espressioni di “controllo contabile” e “revisione contabile” presenti nell’ ordinamento. Ancora, si è avuto un accorpamento della materia, precedentemente regolata sia dal codice civile, sia da atti della Consob, della Banca d’Italia e di altri Organismi di vigilanza. Ai fini dei meccanismi di governance e controllo, l’universo delle società di capitali è stato distinto in: 1. enti di interesse pubblico (artt. 16-19 del dlgs 39/10) e altre società di capitali. Alla prima categoria appartengono, in sostanza, tutte le società che per dimensioni, rapporto con il mercato, oggetto sociale, assumono una particolare rilevanza pubblica (banche, intermediari finanziari, assicurazioni, emittenti strumenti finanziari). Per questi soggetti e per tutti i soggetti da questi controllati, la revisione legale non può essere svolta dal collegio sindacale; 2. altre società per azioni, in cui il regime naturale è quello binario, che vede la revisione legale non affidata al collegio sindacale. Se consentito dallo statuto, però, può essere prevista la coincidenza tra collegio sindacale e soggetto incaricato della revisione; 3. società a responsabilità limitata che non rientrino nel numero 1), in cui, a meno che non sia diversamente disposto dallo statuto, la revisione legale dei conti è effettuata dal collegio sindacale. […]