Public Finance in the Euro Zone—In a Difficult Situation

Original Papers

Public Finance in the Euro Zone—In a Difficult Situation     

Author Index Volume 24 2003

Authors Index

Author Index Volume 24 2003     

Attribute differences between U.S. GAAP and IFRS earnings: An exploratory study

In this study we explore attribute differences between U.S. GAAP and IFRS earnings. Our study is motivated by the ongoing harmonization process in accounting standard setting as well as by recent convergence projects by the FASB and the IASB. We test two market-based earnings attributes, i.e., value relevance and timeliness, as well as two accounting-based earnings attributes, i.e., predictability and accrual quality. These attributes are tested for German New Market firms as they are allowed to choose between IFRS and U.S. GAAP for financial reporting purposes. Overall, we find that U.S. GAAP and IFRS only differ with regard to predictive ability. The fact that U.S. GAAP accounting information outperforms IFRS also holds after controlling for differences in firm characteristics, such as size, leverage and the audit firm. However, our results also seem to suggest that these differences are not fully valued by investors, as we do not observe significant and consistent differences for the value-relevance attribute.     

Quantity and quality of information and SME financial structure

We test whether the amount and/or quality of financial statement information affects the financial structure of small and medium-sized enterprises (SMEs). Belgian SMEs are used, because there are important differences in disclosure and audit requirements among them. Consistent with the traditional view that asymmetric or incomplete information restricts access to external funds, our results indicate that both the amount and quality of financial statement information are positively related to SME leverage. In addition, we find that leverage is positively related to asset structure, growth (prospects) and median industry leverage, and negatively related to firm age and profitability.     

Socialisme en Vrije Ondernemingsgewijze Produktie

Summary In his address to the Dutch Christian Employers Association the socialist prime minister Den Uyl analyzed the strained relations between socialism and the system of free enterprise. The authoritarian type of socialism is rejected. Den Uyl avoids an analysis of the economics of liberal socialism; the idea of workers' management seems to suffer from hypertrophy of democracy. It is pointed out that the new scarcity, the demand for workers' participation in management and new legislation will inevitably result in a decline of the freedom of free enterprise.     

A Tale of Two Models: Comparing structuralist and neoclassical computable general equilibrium models for South Africa

This paper compares two working models of the South African economy, an orthodox, neoclassical computable general equilibrium model in which savings drive investment, and a more structuralist, eclectic, model for which there is an independent investment function. Both models are calibrated to the same social accounting matrix. Comparative statics of simplified prototype models are presented and identical simulations with the corresponding applied versions are compared. It is seen that the neoclassical model fully supports the principles of the 'Washington Consensus' while the structuralist model requires a far more heterodox set of policies to avoid slow growth or high inflation.