Cross-sectional variation in the economic consequences of international accounting harmonization: The case of mandatory IFRS adoption in the UK

This study examines the economic consequences for UK firms of the European Union's decision to impose mandatory IFRS. We hypothesize that the impact varies across firms and is conditional on the perceived benefit. We estimate a counter-factual proxy for a UK firm's willingness to adopt IFRS from the prior GAAP choices of German firms. We show that this proxy predicts cross-sectional variations in both the short-run market reactions and the long-run changes in cost of equity that are associated with the decision. This implies that mandatory IFRS adoption does not benefit all firms in a uniform way but results in relative winners and losers.     

Does mandatory IFRS adoption improve information quality in low investor protection countries?

We examine the effect of mandatory IFRS adoption on the information quality of financial reporting in France, Germany and Sweden. These three Western European civil law countries are characterized as low investor protection by the World Economic Forum's 2012/2013 Global Competitiveness Report. Using data for 2003 and 2011, we find significant improvement in both forecast accuracy and forecast dispersion following mandatory IFRS adoption in all three countries. Furthermore, the effect on information quality is greater the lower the strength of investor protection. These results suggest that mandatory IFRS adoption in low investor protection countries leads to an improvement in information quality. A tentative implication of the results is that standard setters should not delay IFRS adoption pending regulators implementing a high investor protection.     

A Proposal of an International Environmental Reporting Grid: What Interest for Policymakers,Regulatory Bodies,Companies, and Researchers?: Reply to Discussion of “Mandatory Environmental Disclosures by Companies Complying with IAS/IFRS: The Case of France,Germany and the UK”

This article offers the authors' insights concerning the issues raised by Professor Trevor Wilkins in commentaries on the article “Mandatory environmental disclosures by companies complying with IAS/IFRS: the case of France, Germany, and the UK” (Barbu et al., 2014). As suggested by Professor Wilkins, we demonstrate the utility of the international environmental reporting grid proposed in Barbu et al. (2014, Table 3): (1) for IASB policymakers and other regulatory bodies, (2) for companies to improve their environmental reporting, (3) for further research, and (4) for understanding the economic and financial consequences of IAS/IFRS-compliant environmental information.     

Transition to IFRS and compliance with mandatory disclosure requirements: What is the signal?

The present study examines 153 Greek listed companies' compliance with all IFRS mandatory disclosure requirements during 2005 and complements and extends prior literature in the following way. The unique setting i.e., measuring compliance with IFRS mandatory disclosure requirements during the first year of IFRS implementation, allows for examination of the possibility that the changes in the 2004 shareholders' equity and net income, as a result of the adoption of IFRS, constitute explanatory factors for compliance. Thus, this study hypothesises that, in addition to the financial measures and other corporate characteristics that prior literature identifies as proxies for explaining compliance, a significant change in fundamental financial measures, because of the change in the accounting regime, may also explain compliance based on the premises of the relevant disclosure theories. The findings confirm these hypotheses. This study also makes a methodological contribution on measuring compliance with all IFRS mandatory disclosure requirements by using two different disclosure index methods and pointing out the different conclusions may be drawn as a result.     

Demand for farm animal welfare and producer implications: Results from a field experiment in Michigan

This study utilizes a Becker-DeGroot-Marschak (BDM) mechanism to assess Michigan consumer demand for animal welfare practices. Results are examined in the context of changing farm production costs and producer marketing margins. We find that while consumers are willing to pay significant premiums for animal welfare standards, failing to account for the costs associated with producing the entire animal under the new system could lead to suboptimal policy that negatively affects producer welfare. Our results suggest that consumer premiums for animal welfare are product specific and that WTP estimates should not be generalized to the entire animal. We discuss policy implications of our findings and highlight the importance of considering producer costs when evaluating consumer demand for farm animal welfare practices.     

Repetitive disclosures in the MD&A

This study is the first to empirically analyze repetitive disclosures in the Management Discussion and Analysis (MD&A) section of the 10‐K filing. Repetitive disclosures refer to the extent that content in the MD&A is repeated from the audited financial statement notes. I empirically analyze repetitive disclosures in the MD&A section of the 10‐K filing, and find that firms tend to use more repetitive disclosures when firms have a new CEO, a high level of new disclosures in the notes, issued equity, and have missed the prior year's earnings benchmark. These findings suggest that not all managers use repetitive disclosures to simply obfuscate disclosures. Rather, some managers use repetitive disclosures to emphasize firm‐specific events, consistent with the succession hypothesis. The Securities and Exchange Commission (SEC) states that repetitive disclosures are uninformative and that such disclosures decrease the informativeness of other disclosures in the MD&A. Casting doubt on the SEC's comments, in my primary analyses, I find that repetitive disclosures are informative to investors; this result is stronger for individual investors. Overall, my results suggest that repetitive disclosures are informative, and such disclosures may be effective tools for providing information to investors.     

Mandatory CSR expenditure and firm performance

India has recently mandated corporate social responsibility (CSR) expenditure under section 135 of the Indian Companies Act 2013 – the first national jurisdiction to do so. In line with the “shareholder value maximization” concept, we document the positive impacts of CSR expenditure on firm performance measured by return on asset and cash flow from operations. Additionally, we find that, despite the regulatory requirement, mandated CSR legislation is a significant but not the sole determinant of actual CSR spending by firms; rather, firm-specific economic factors such as size, level of cash balance and cash flow from operations have a moderating effect. We also observe that CSR expenditure contributes to firm performance irrespective of the level of actual CSR expenditure relative to the level of mandatory CSR expenditure. Our findings potentially reconcile conflicting results presented in the literature and provide valuable information for governments and regulatory authorities that are considering the mandatory implementation of CSR expenditure.     

强制性次级债与商业银行的公司治理

对于商业银行而言,次级债除了具有补充资本、融通资金的功能外,还具有特殊的公司治理功效。基于这一视角,本文对次级债在商业银行公司治理中功效的比较优势进行了论述,介绍了强制性次级债市场约束效用的两步骤分析框架,并就强制性次级债政策提供了相应评论。本文得出以下研究结论:恰当的强制性次级债政策有助于商业银行公司治理的完善以及国内金融生态的改善;为了确保MSDP(MandatorySubordinatedDebtPolicy)的投资者确实具备对银行风险变化进行监督和有所反应的动机,应该对由“内部人”持有的债券数量进行限制并完善信息披露制度;加快推进国有商业银行的股份制改革,培育市场化的发债主体和机构投资者是实施MSDP的必要基础条件。     

Evidence of assurance enhancing the quality of voluntary environmental disclosures: an empirical analysis

In response to investor and public concerns about harm to the environment, companies are increasingly disclosing environmental information. To enhance the quality of corporate environmental disclosures in a largely voluntary context, various stakeholders are also demanding independent assurance. This study uses a stakeholder‐agency theoretical perspective to examine whether the quality of voluntary environmental disclosures is enhanced when assured. This study also examines the difference in the quality of voluntary environmental disclosures when assurance is provided by either professional accountant assurers or private consultants. Our sample comprises listed companies voluntarily disclosing environmental information in stand‐alone reports, annual reports, and websites. We use an index based upon the Global Reporting Initiative (GRI) to measure the quality of company environmental reporting. Results of this matched pairs study show that the quality of voluntary environmental disclosures scores significantly higher for assured companies than unassured companies. For assured companies, the quality is no different when assured by accountants or consultants. Additional analysis provides preliminary evidence that experience improves the quality of environmental disclosures.