SEC interventions and the frequency and usefulness of non-GAAP financial measures

This paper examines the effect of two Securities and Exchange Commission regulatory interventions related to disclosure of non-GAAP financial measures. There are three main results. First, the probability of disclosure of non-GAAP earnings declines in 2003, but the probability of disclosure of other non-GAAP financial measures has an accelerated decline after the first intervention. Second, all else equal, after Regulation G, investors have a positive market reaction to the disclosure of non-GAAP earnings. Finally, investors react to the adjustments made by I/B/E/S financial analysts as they do to the GAAP surprise, but they do not react to the additional adjustments made by firms.     

Adoption of IFRS in Spain: Effect on the comparability and relevance of financial reporting

EU Regulation 1606/2002 requires application of International Financial Reporting Standards (IFRS) by groups listed on European stock markets. In Spain, listed groups are now obliged to prepare consolidated financial information under IFRS, and legislative changes to bring local rules into line with international standards have been tabled.In this context, the potential impact of IFRS is fraught with uncertainty. Our study of IBEX-35 companies focuses on the effects of the new standards on comparability and the relevance of financial reporting in Spain. We address these objectives by seeking significant differences between accounting figures and financial ratios under the two sets of standards (i.e. Spanish accounting standards and IFRS).The results obtained show that local comparability has worsened. The study reveals that local comparability is adversely affected if both IFRS and local accounting standards are applied in the same country at the same time. Reforms to bring local rules into line with international standards are therefore urgent. We also find that there has been no improvement in the relevance of financial reporting to local stock market operators because the gap between book and market values is wider when IFRS are applied. While there has been no gain in terms of the usefulness of financial reporting in the short-term, improved usefulness may be achieved in the medium to long-term.     

Contingent valuation of ill health caused by pollution: testing for context and ordering effects

Contingent valuation is being increasingly used to value episodes of ill health caused by environmental pollution. In contrast to studies that have used contingent valuation to value other types of non-market goods, health episode valuation studies have tended to 1) value several ill health episodes or symptoms in the same survey, and 2) be vague in the survey instrument about the cause of the ill health, how it would be avoided or how the improvement would be paid for. The resulting values are then combined with exposure-response functions to generate economic estimates of health damages from pollution. This study tests whether episode valuation responses are sensitive to two of these design features. In a five-country study using split sample treatments, neither episode ordering nor mention of the cause of the ill health influenced stated willingness to pay to avoid specific ill health episodes.JEL Classification: C42, I12, Q51 Correspondence to: Richard ReadyThis research was supported by the European Unions Environment and Climate Research Programme: Theme 4 - Human Dimensions of Environmental Change (contract no. ENV4-CT96-0234). Any views expressed in the paper are not necessarily the views of any of the authors employers.     

The most popular tax in Europe? Lessons from the Irish plastic bags levy

There have been occasional ad hoc efforts to influence consumer behaviour by the imposition of product taxes that reflect external costs imposed by such products that are not initially included in their price. In the spirit of this idea, in 2002 Ireland introduced a 15 Euro cent tax on plastic shopping bags, previously provided free of charge to customers at points of sale. The effect of the tax on the use of plastic bags in retail outlets has been dramatic—a reduction in use in the order of 90%, and an associated gain in the form of reduced littering and negative landscape effects. Costs of administration have been very low, amounting to about 3% of revenues, because it was possible to integrate reporting and collection into existing Value Added Tax reporting systems. Response from the main stakeholders: the public and the retail industry, has been overwhelmingly positive. Central to this acceptance has been a policy of extensive consultation with these stakeholders. The fact that a product tax can influence consumer behaviour significantly will be of interest to many policymakers in this area. This paper analyses the plastic bag levy success story and provides insights and general guidelines for other jurisdictions planning similar proposals.

Understanding the dynamics behind bank branch service quality in Portugal: pursuing a holistic view using fuzzy cognitive mapping

Using fuzzy cognitive mapping, this study aims to create a holistic framework whereby the determinants of bank branch service quality and their cause-and-effect relationships can be identified and dynamically analyzed. The methodology is applied using a group of experts from the banking industry in Portugal. Our results not only indicate the applicability and usefulness of the proposed approach, but identify human resource characteristics (which include collaborators’ personal and professional training) and management team technical skills as particularly relevant driving forces of bank branch service quality. The proposal holds great potential for the operational planning and improvement of bank branch service quality, which is a prime concern for bank administrators, bank branch collaborators, and society at large. Advantages and shortcomings of the framework are also reported.     

The influence of culture and transparency on global research and development intensity: An overview across Europe

Culture and transparency can be described as a set of beliefs, norms, and actions, which drive the human action into innovativeness. Over the centuries, those pillars have driven individuals, groups, organizations, and nations, into the most complex networking schemes. It seems now unquestionable that those beliefs and policies, affect both private and public organizations, driving them across innovation wages in a more incremental or radical way. The dependent variable in this research (R&D) embodies the disbursements in research and development, carried out by business enterprise and public sector, and by education institutions. Thus, this research aims to mainly explore the effect of culture and transparency, as drivers of business attractiveness, on global R&D intensity. Using information from 31 European countries over the period 2010–2014, total R&D expenditures were regressed against several variables such as the Hofstede's cultural dimensions, the public sector transparency index, and other aggregated variables. Most of the theoretical assumptions are now supported by our empirical outcomes. Culture and transparency can act as attractiveness drivers, for business sector organizations and for other private and public institutions, toward the implementation of knowledge transformation mechanisms and intellectual capital achievements.     

IFRS adoption in Spain and the United Kingdom: Effects on accounting numbers and relevance

This paper examines the quantitative impact of mandatory IFRS adoption on financial reporting issued by first-time adopters. It analyses whether relevance of financial information is higher under IFRS than the information provided in financial statements prepared under local GAAP when investors have to make decisions in the capital markets. Both studies compare results in Spain and in the United Kingdom, whose accounting systems have been traditionally considered in opposite groups. The results of the research reveal that the quantitative impact is significant in both countries and, against what we expected, it is higher in the United Kingdom. We also observe that IFRS have negative effect on the relevance of financial reporting in both countries, although this effect has only been significant in Spain.     

Joined-up Government of utilities: a meta-review on a public–public partnership and inter-municipal cooperation in the water and wastewater industries

Private-sector participation in public services delivery has been criticized due to unfulfilled expectations. In response, joined-up government is being introduced as an alternative approach to providing water and wastewater services. This approach involves the establishment of horizontal (i.e. inter-municipal cooperation) and vertical (i.e. public–public partnership) integration. Drawing on a meta-review focused on the water and wastewater industries, this study shows that both arrangements have positive aspects, such as cost savings. However, contractual schemes and inter-departmental coordination efforts must be carefully managed or they will fail. In addition, research on cooperation between public bodies is scarce and must be better coordinated concerning study aims and methods.     

Innovation strategies and complementarity between innovation activities: the case of commercial archaeological firms

Service Business - As a key part of their professionalization process, creative industries (CIs) including private or contract archaeological firms (AFs) increasingly rely on bundles of...